Bankers at the state-supported Royal Bank of Scotland may still receive bonuses, the chancellor of the exchequer said today, with an investigation announced by the Treasury last night unable to alter existing contractual obligations.

The government is under pressure to rein in the award of bonuses to bankers at RBS after reports the bank had set aside a bonus pot of £1bn for its 177,000 employees. There is growing anger that bankers who mishandled billions in the run up to the recession may still be rewarded despite RBS being propped up by £20bn in taxpayers' money and in three weeks likely to post losses running to billions of pounds for 2008.

Speaking on BBC1's Sunday AM programme today, Alistair Darling said he had reached an agreement with the chief executive of RBS that no one "associated with losses" should be rewarded. However he appeared to concede RBS bankers were likely to receive bonuses out of sync with performance. The chancellor said: "Obviously there are contractual problems with some staff." In some cases, he said bonuses may even be appropriate.

"If you look at your average teller, they're not terribly well paid, and no-one would quarrel with making sure they are properly rewarded," said Darling.

The chancellor said that RBS also wanted to make sure they have slimmed bonus payments down to the "absolute" minimum. "They have to understand that these banks would not be here but for the British tax payers, therefore they have to show the degree of restraint that people would expect," he said.

Last night the Treasury said that an investigation has been launched into banks and their bonus structures: "There will be a tightening of the banks' purse strings. This is about keeping any rewards in line with the public mood, and the public mood is unforgiving," said a Treasury official.

RBS wouldn't be drawn on a figure for capped bonuses but said there would be "no reward for failure".

However a Sunday paper reported that the bank aimed to counter public outrage at bonuses by limiting the cash element being paid to each employee to £25,000 with the rest made up in shares in the bank. Most of the share options would be deferred or withheld if the employee left within a set period or if their part of the bank made "significant" losses in the next two years. The total payout would be around 60% lower than last year's.

The Treasury says it has been planning to move on bonuses for some time and points to a review begun in October at how bonuses have incentivised risk-taking.

However, momentum has picked up with the announcement last week by Barack Obama that workers employed at banks involved in the American recapitalisation scheme must have their payments capped at $500,000 (£346,450).

Darling announced the pay review in an article for a Sunday newspaper, and said that the pay review would be part of a wider inquiry into banks.

"I am now setting up a review which will examine how banks are managed," he wrote. "Bank boards have a duty to ask more searching questions of their executives – when times are good as well as when they turn bad.

"I expect the review to make recommendations about the effectiveness of risk management by banks' boards, including how pay affects risk-taking. It will also look at how boards operate, at the balance of skills, the role of institutional investors, and whether our approach is consistent with international best practice."

The pay caps could be coupled with provisions forcing firms to defer awards or make the majority of payouts in shares rather than cash.

Some of Britain's leading bankers, who have been blamed for mishandling billions in the run-up to the current economic crisis, will face a grilling in front of television cameras by the Treasury select committee this week.

On Tuesday Fred Goodwin and Tom McKillop – the former chief executive and chairman of RBS – face interrogation, alongside Andy Hornby and Lord Stevenson of Coddenham, the former chief executive and chairman of HBOS.

On Wednesday Barclays' chief executive, John Varley, and the Lloyds TSB group's chief executive, Eric Daniels, will appear alongside Stephen Hester, who recently arrived to help clear up the Royal Bank of Scotland.

Lord Mandelson, the business secretary, called last week for banks that have been bailed out by public money to rein in big bonuses for their executives.

"The bankers themselves need to consider their own responsibilities in this situation," he said. "They have got to understand the heat, the anger, that many people feel about the mistakes that have been made, and they certainly don't want to see banking chiefs benefiting from past failure.

"If they want to have incentivised pay, that will have to be linked to their achievements in the future, not what they have done wrong in the past."

Lloyds and Barclays are also reportedly planning to pay out hundreds of millions of pounds in staff bonuses. RBS is 70% owned by the taxpayer, and Lloyds is 47% publicly owned after the firms tapped a £50bn bail-out fund.

The lenders are also preparing to avail themselves of an insurance fund set up by the Treasury last month to shelter firms from losses on toxic assets.

Daniels was last week ploughing ahead with plans to offer generous payouts to top staff at Lloyds. He has defied advisers who have warned him that this will inflame public revulsion over "rewards for failure".

Barclays has so far not received a direct taxpayer bail-out, but has made use of a range of other government facilities, and may tap into the new insurance scheme. Its investment banking divisions could pay out some of the biggest rewards in the City this month. It inherited a £1.7bn bonus "pot" after buying a chunk of collapsed Wall Street giant Lehman Brothers last year.

Philip Hammond, the shadow Treasury chief secretary, said last night that it would be a "slap in the face for millions of families worried about jobs and paying the bills" if bankers received huge bonuses. The message to them had to be "that the party is over".

Leader of the Commons , Harriet Harman, said yesterday that bankers' "rotten" remuneration systems had led to a 40% pay gap between men and women in the sector and were a "licence for unfairness and discrimination".

The Equality and Human Rights Commission announced details last month of an inquiry into sex discrimination in the City, including pay and bonuses.

Harman denounced an "old boys' network" paying itself millions. Addressing a Labour party regional conference in Sheffield, she suggested that action should go further than the ban already imposed on board-level bonuses at banks bailed out by the taxpayer.

"There is something rotten in the remuneration system of the banks and finance companies," she added. "Men paying themselves millions of pounds of bonuses each – and then saying that they didn't know what was going on."

Labour has lost all the poll "bounce" that was achieved by Gordon Brown's bail out of the banks last autumn.

A new ICM poll puts Labour on 28% – down 4% since January – the Conservatives on 40% – also down 4%– and the Liberal Democrats on 22% – up 6%.