David Cameron today launched a full parliamentary inquiry into the rate-rigging scandal amid a wave of criticism of British banking.
The Prime Minister batted away calls for a Leveson-style inquiry into the issues, insisting he wanted to reach the truth quickly.
The comments, in a statement to MPs, came after Barclays boss Bob Diamond admitted he was disappointed that the rate-rigging scandal happened on his watch.
However, he signalled that he would fight for his job, saying he wanted to "make sure that it cannot happen again".
Barclays chairman Marcus Agius resigned this morning and announced an internal review into the bank's "flawed" practices.
Mr Cameron said the Serious Fraud Office were looking at whether any criminal prosecutions could be brought.
He went on: "I want us to establish a full parliamentary committee of inquiry involving both Houses chaired by the Chairman of the House of Commons Treasury Select Committee.
"This inquiry will take evidence under oath have full access to papers, officials and Ministers - including Ministers and Special advisers from the last government and it will be given, by the government, all the resources it needs to do its job properly."
Mr Cameron added: "This is the right approach because it will be able to start immediately it will be accountable to this House and it will get to the truth quickly, so we can make sure this can never happen again.
Labour leader Ed Miliband told MPs vowed to continue pushing for a "full and open" independent inquiry.
"I'm not convinced by his way forward because I do not believe it measures up to the scale of what is required," he said.
Mr Miliband told the Commons the only way to rebuild trust in the banking system was with a full, independent inquiry.
"However able or distinguished, politicians investigating bankers will not command the consent of the British people," he said.
"People are understandably angry about the way their banks let them down and I don't believe the proposed way forward is the way we can build the consensus that is required for change."
The Labour leader said there had already been a number of reports by parliamentary committees into the banking crisis.
"I appreciate the Leveson inquiry has been uncomfortable for all sides but that's the way it should be," he added. "We will continue to argue for a full and open inquiry, independent of bankers and independent of politicians."
Labour is pressing ahead with its demands for a full public inquiry, and hopes to secure a vote in the House of Lords tomorrow, said a senior party source.
The source declined to say whether Labour would boycott the parliamentary probe if it was unable to secure a public inquiry, but said the party would not "play student politics".
Responding to Mr Cameron's announcement, the Labour source said: "This isn't good enough. The public will not accept an investigation by politicians into bankers.
"There have been select committee reports before into banking. They don't seem to have solved the problems.
"We are not giving up on our demand for a full public inquiry."
The parliamentary inquiry will have powers to summon witnesses and take evidence under oath and will be given access to official papers, Mr Cameron's official spokesman said. It will be expected to sit in public.
Discussions have already taken place over what assistance can be offered by Treasury officials and Government lawyers during its investigations.
"The key thing is that they have the powers to get hold of any information they need to get hold of and that they have the resources they need to be able to do their job effectively," said the spokesman.
"We are all agreed that it is important that the committee has the powers it needs, the information it needs, the resources it needs to be able to do a thorough job. We need to make sure that the committee can access all the papers it needs to be able to do its job properly."
The precise timetable for the inquiry - including the question of whether it will sit through Parliament's summer recess - will be a matter for its chairman, Treasury Committee chair Andrew Tyrie, said the spokesman.
But he added: "Our objective is to get cracking as quickly as possible and progress so that we can feed in any conclusions to the legislation that is due to be introduced a the start of next year."
TUC general secretary Brendan Barber said: "The Government's reluctant conversion to a new parliamentary inquiry into banking is a welcome recognition of public anger, but still falls short of a proper judge-led inquiry immune from the party politics and lobbying that surround any parliamentary process. That is why we need Leveson to deal with media barons, and something similar to deal with over-mighty bankers.
"The inquiry should not be judged on the number of heads that roll but whether it leads to the root and branch reforms that the banks have successfully lobbied against for years.
"The fact is banks stopped servicing the UK economy properly long before the crash. We need a banking sector that does far more of its core job - supporting consumers and businesses - and far less of the socially-useless financial wizardry that got us into this mess."