Lloyds TSB today announced plans to install up to 200 cash machines dispensing £5 notes during the coming year.
The group already has 107 ATMs that dispense the notes, the majority of which are located on university campuses or in town centres in areas where there is a large student population.
The news comes a week after HSBC said it planned to stock £5 notes in a further 210 of its ATMs, bringing the total number of its cash machines that dispense the notes to nearly 400.
The Bank of England is keen to get more £5 notes into circulation due to a general shortage of the notes and the poor quality of those that are used.
There are currently around £1.25 billion of £5 notes in circulation in the UK, or 249 million notes, compared with 640 million £10 notes and more than 1.5 billion £20 ones.
Because £5 notes get used more regularly than higher denomination notes, they have a much shorter lifespan, with the average £5 note lasting for only one year before it becomes too damaged to use, compared with £50 notes which last for five years or more.
All cash machines can dispense £5 notes but the majority of banks chose to load them with only £10 and £20 ones, as these notes tend to be better quality and using them means the ATM does not need to be restocked as frequently.
Gill Sephton, head of ATM strategy and change at Lloyds TSB, said: "We are extremely committed to our cashpoint network and welcome the Bank of England's initiative to increase the number of £5 notes in circulation.
"We already have over 100 cashpoint machines dispensing £5 notes and we are dedicated to building on this capability to ensure our cashpoints provide convenient facilities for all."
Research carried out for Lloyds found that 60% of people said they would find it useful to be able to withdraw £5 notes from cash machines.
Younger people were the most likely to want to be able to withdraw the low denomination notes, with 81% of 18 to 24-year-olds saying they welcomed the move to have more ATMs dispensing £5 notes, while 74% of 25 to 34-year-olds felt the same way.
* ICM questioned 2,003 people during September.