London - Icelandic bank Landsbanki's British internet bank icesave has stopped customers withdrawing or depositing money, according to its Web site.

"We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts," icesave said on Tuesday. "We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly."

Earlier, the Icelandic Financial Supervisory Authority said it would take control of Landsbanki, the country's second largest bank by value.

The IFSA's move was the latest step by Icelandic authorities to control a financial sector crisis that has already led to the part-nationalisation of the country's number-three bank Glitnir and new legislation to give the government sweeping powers over the banking sector.