Britain is to buy up to £20 million of Malawian currency to help stabilise the African state's economy following a major devaluation, it has been revealed.
The announcement was made by International Development Secretary Andrew Mitchell during a visit to Malawi which marks a relaunch of the bilateral development partnership under new president Joyce Banda.
The Bank of England will also provide a financial expert to help the Malawian government deal with the impact of the one-third cut in the value of the kwacha, carried out on the advice of the International Monetary Fund earlier this month in a bid to shore up the ailing economy.
Britain suspended direct aid donations to the government of Malawi last year, because of concerns about the economic management and governance of the administration of former president Bingu wa Mutharika, who died in April.
Foreign Secretary William Hague last month announced the UK would appoint a new High Commissioner to the Commonwealth state, a year after the expulsion of the previous holder of the post, who had branded Mutharika "autocratic and intolerant of criticism".
And on May 12, Mr Mitchell announced £10 million in urgent funding from the UK's existing aid budget for Malawi's health system, directed through non-governmental organisations.
Mr Mitchell was today talking with President Banda, who took office on April 7, and senior Malawian finance officials in commercial capital Blantyre.
He will tell her that Britain is determined to ensure that ordinary Malawians do not suffer short-term consequences from the devaluation, which is regarded by the international community as a step in the right direction for Malawi's long-term financial security.
During his three-day visit, the International Development Secretary will also meet with representatives from civil society, the private sector, the religious community and the donor community and view a number of UK-funded programmes, including health clinics.
Mr Mitchell said: "Britain has been a long-time friend to Malawi and we stand ready to help Malawi during this difficult time of transition.
"I have discussed with President Banda Malawi's immediate needs and I look forward to more detailed discussions with the President and her ministers on further UK support during this visit.
"The UK welcomes the peaceful and democratic transition that has recently taken place in Malawi, but growth is critical to Malawi's long-term development.
"That is why we will support Malawi government efforts to stabilise the economy, develop the private sector, diversify the country's exports and get Malawi back onto the path of sustained growth.
"We are already providing crucial support for Malawi's health service to get life-saving medicine to the most vulnerable.
"Furthermore, to help ensure economic stability and future growth, I am pleased to confirm that the Bank of England will be providing technical assistance and will work directly with the Reserve Bank of Malawi."
Speaking ahead of the visit, President Banda said: "I am looking forward to welcoming Mr Mitchell to Malawi and to continuing discussions with him on the UK's development programme.
"The support from the UK is welcome, and I will be discussing with Mr Mitchell and his officials how we can best target this support to provide much needed assistance to the poor and most vulnerable."