The Federal Treasurer has been forced to defend Government plans to put a levy on bank deposits, before the official announcement has even been made.

Treasurer Chris Bowen is expected to detail plans today which were announced overnight, indicating the Government was considering a 0.05 per cent levy on bank deposits up to $250,000 to be collected from January 1, 2016. The levy is forecast to raise $733 million in its first 18 months.

The levy is to be imposed on banks rather than account holders, but insiders say the lenders would certainly pass it on to customers. Funds raised are set to be funnelled into a new 'Financial Stability Fund', counted as revenue in the budget but kept in case the banks collapse.

The Treasurer said it would give surety to small-time investors: “It'll be quarantined from the rest of the budget and just put aside in case there's ever a need with a bank getting into trouble in Australia,” Mr Bowen told Channel Seven, “it hasn't happened in Australia for quite a while, but we can't be complacent... the Reserve Bank, APRA, ASIC have all suggested to us that this is a good idea... [the] government should listen.”

An official announcement is expected this afternoon.