The cuts will hit 1600 permanent UK staff, while a further 1,150 temporary and contract staff will be laid off. Another 1,750 jobs will be lost from the bank's overseas operations in India. Two hundred of the UK permanent jobs will be relocated offshore, leaving the bank with approximately 2000 staff based in India.

The bank says the cuts - afflicting 40% of its group IT division - will take place between now and 2012 as it complete the integration of IT operations with HBOS. Most of the job losses are due to take place after next July, once customer accounts have been transferred from LTSB to HBOS operating platforms, at which point the jobs supporting many HBOS-specific platforms that are being decommissioned will be made redundant.

HBOS staffers will bear the brunt of the blow, accounting for around 90% of the job losses amongst permanent staff according to union estimates. Some of the largest job reductions will be at HBOS sites at Edinburgh, Halifax, Leeds and Chester, as the bank halves the number of locations it houses IT staff functions from 24 to 12.

Mark Fisher, director of group operations at Lloyds, says: "The changes we are putting in place will give us a world-class IT operation that will benefit our customers and all our other stakeholders. We will work closely with the colleagues affected by today's announcement to help them through these changes. We have mitigated the impact on permanent staff with a significant release of temporary and contract staff."

The plans were branded "an absolute disgrace" by Unite national officer cath Speight, who says it is time for the government to step in and demand answers on behalf of taxpayers and staff. "The announcement of 4,500 job cuts today lets down its staff, customers and taxpayers with no acknowledgement of Lloyds Banking Group's social responsibilities."

Ovum analyst Alex Kwiatkowski, dismisses the "typically hysterical" union reaction and says the bank needs to shed excess capacity to compete. "Will customers suffer as a result of these changes? No. Is the bank in danger of exposing itself to additional risks by laying-off staff? Potentially yes, if vital systems knowledge is held in the heads of key individuals who are allowed to depart without their brains being drained. However, we envisage that Lloyds Banking Group will have covered this critical point. Business as usual will prevail."