Labour leader Ed Miliband has thrown his weight behind calls for former RBS boss Sir Fred Goodwin to be stripped of his knighthood.
He told the Daily Mail his party had been "clearly wrong" to recommend that Sir Fred be recognised for "services to banking" in 2004.
The senior City figure has been heavily criticised for his part in the dramatic collapse of RBS and the honour is being reconsidered.
Prime Minister David Cameron is understood to be "sympathetic" to the calls to strip him of the award and said it was "right" it was reviewed.
The case has been referred to the Honours Forfeiture Committee, made up of some of the country's most senior civil servants.
Mr Miliband told the Mail: "It was clearly wrong for him to be given a knighthood, knowing what we know now about the damage he caused not just to RBS but to hard-pressed ordinary families up and down Britain who are now paying the price of his failure.
"It's right that it should be revoked. There is a widespread recognition of the damage Fred Goodwin caused - and I think the privilege of a knighthood is a privilege you should only continue to enjoy if you haven't done such damage to the British economy."
What sympathy there was for Sir Fred was reduced still further because he failed to show "great remorse" or accept he was to blame for what happened, he suggested.
"This was somebody who basically said, 'I've done nothing wrong, this is everybody else's fault'. That's totally unacceptable. For a lot of people it has come to symbolise the failure of the banking industry to wake up to what has happened."
Mr Cameron said the committee should take into account a Financial Services Authority (FSA) report about the failures at RBS.
The Honours Forfeiture Committee normally considers cases only where an individual has been jailed for more than three months or has been struck off or censured by a professional body for failings relevant to the granting of the honour.
But Whitehall sources confirmed that the body - led by Cabinet Secretary Jeremy Heywood with other civil servants - would be examining Sir Fred's actions. The banker is not expected to appear before the committee personally.
Shadow chancellor Ed Balls, who was working at the Treasury as an adviser to Gordon Brown at the time of the knighthood, said there would be "no complaints from Labour" if it was removed.
He insisted: "At no point did I play any role at all in any way in any decisions about any honours at all, and that would include Fred Goodwin's."
Pressure to punish Sir Fred came amid renewed controversy over the bonus to be paid this year to his successor as chief executive of the part-nationalised RBS.
Mr Cameron has stated that Stephen Hester would get significantly less than the £2 million he received last year.
"I can tell you something: if there is a bonus, it will be a lot less than it was last year," he said during questions and answers following a speech in London on "moral" capitalism.
"The processes that are set out should be followed in the proper way."
Earlier, the bank's chairman, Sir Philip Hampton, denied a report that it was preparing to offer Mr Hester a million pound-plus bonus payout.
The Financial Times said Sir Philip and the bank's board were determined to resist political pressure to curb bonuses and make an award in the range of £1.3 million to £1.5 million, on top of his £1.2 million salary.