Image caption The government still holds 41% of Lloyds Banking Group

Lloyds Banking Group is to cut about 4,500 jobs in its IT operations.

It said 1,600 would be roles held by permanent staff with a further 1,150 working on temporary contracts. The other 1,750 jobs are held overseas.

The bank said the cuts, to happen by 2012, were part of its integration of IT operations between Lloyds and HBOS.

It is the latest round of job losses at the bank, which is 41%-owned by the government, after a £20bn rescue in 2008.

"By making less use of contractors and agency employees, it reduces the impact on permanent staff," the bank said, adding compulsory redundancy would be a last resort.

'Disgrace'

Lloyds said that permanent and temporary roles would go in places including London, Chester, Halifax and Edinburgh.

The Accord union said the announcement would be "devastating for the hard-working and professional employees who are affected".

"In a difficult economic climate, the chances of them finding similar roles will be very slim," Accord's deputy general secretary Clive Webster added.

Meanwhile, the Unite union said it was "an absolute disgrace" that Lloyds was cutting more UK jobs, given that it was "being kept alive by the taxpayer".

Lloyds reported a return to profit for the first half of the year, largely due to a drop in the amount set aside to cover bad loans. It made £1.6bn, compared with a loss of £4bn in the same period a year earlier.

In 2009, the bank made an operating loss of £6.3bn, almost unchanged on the £6.7bn it lost in 2008.

Part of these losses were due to the costs of taking over HBOS during the financial crisis. Lloyds has been accused of not undertaking proper due diligence on the takeover, and therefore underestimating the extent of the bad loans on HBOS's books.