Gordon Brown has called for a return to "traditional" banking methods in Britain as he signalled new curbs on 100% mortgages.
In an article for The Observer, the Prime Minister said that he wanted to see "prudent and careful" lending by the banks which should be the "servant" of the economy, "never its master".
He said the Financial Services Authority would be considering controls on the issuing of mortgages of more than 100% of a home's value. These have plunged many borrowers into financial difficulties when the housing market crashed.
With few such loans now available, the move is likely to be seen as a tacit acceptance that in the past the rules were too lax.
At the same time - with banks now more reluctant to lend - Mr Brown said that it was important that first-time buyers on modest incomes who had been unable to build up large deposits were still able to get mortgages.
While Mr Brown stressed that he was not advocating a divide between retail banking on the high street and the riskier investment banking, he said that the way the system was operating needed to be "refocused".
"We do want to see the reinvention of the traditional savings and mortgage bank in Britain, for loans to be made on prudent and careful terms, not just to people with large deposits, but to those on middle and modest incomes who wish to buy their home but who have not been able to save a huge deposit," he said.
"We have also asked the Financial Services Authority to look at how in future we should control new mortgages for more than 100% of house value."
With companies still complaining that they cannot get the credit they need to carry on in business, the Prime Minister said that there had to be a "clearer focus" by the banks on lending to UK firms.
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He indicated that discussions were still continuing with the banks on a plan for the Government to underwrite their so-called "toxic" assets to enable them to resume the flow of credit.
