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The board of Northern Rock said it is "very disappointed" by the government's decision to nationalise the bank after failing to approve a private takeover.

Alistair Darling, the chancellor of the exchequer, announced yesterday the government's intention to acquire all the shares in the company as a temporary solution to the bank's crisis.

Shares in the bank were suspended from the London Stock Exchange this morning.

The government has appointed Ron Sandler, former chief executive of Lloyd's of London, as the new executive chairman of the company and Ann Godbehere, former head of finance for Swiss Re, as the new chief financial officer to work with the existing management team.

In a statement the board, which had itself put in a bid to take over the bank, said: "It has been important to have had the time to ensure there were a number of private sector solutions available.

"The board hoped that at least one of those options would succeed and is very disappointed that the government concluded that it was unable to provide funding to support a private sector solution and, in particular, the proposal put forward by the company, which the board believed satisfied the interests of all stakeholders."

The prime minister has today defended the decision.

Gordon Brown told a press conference nationalisation was "the right move at the right time for the right business."

Mr Darling claimed the move was only temporary and the bank would eventually be sold back into private ownership.

The bank's financial difficulties began last year as the global credit crunch set in.

It was forced to ask the Bank of England for emergency funding, leading to the first run on a bank in over a hundred years.