Reports have confirmed that the Icelandic parliament voted in favour of repaying the UK and Dutch governments more than ?3billion.

The money paid back by will be used to reimburse funds paid by the governments to compensate savers who lost money after the Icelandic online bank Icesave failed.

Around 400,000 people lost money from savings accounts due to the collapse of Icesave’s parent company Landsbanki last year.

The agreement was initially made in June, but was only passed after an amendment was added setting various limits to the payments.

The total amount that will be paid back by the country has been limited based on the level of its? gross domestic product (GDP).

Iceland will have to pay up to 4% of its GDP every year to the UK and a further 2% to the Netherlands.

The payments are not due to begin for another seven years, but the bill says that if the countries debt has not been cleared by 2024 then no further payments will be made, providing an eight year period for the loans to be repaid.

Iceland’s prime minister Johanna Sigurdardottir Said: “The guarantee of the combined loans from the United Kingdom and the Netherlands constitutes the single largest financial commitment ever undertaken by the government of Iceland”.

The UK Treasury said in a statement: “As you would expect, the UK will look carefully at any conditions placed upon the loan to ensure that they are reasonable”.

Some members of the Icelandic parliament have questioned why the government should have to cover the debts of a private bank.

There is anger at the United Kingdom for using anti-terror laws to freeze Icelandic assets.