The proposed tie-ups, which may trigger windfall payments for members of the two smaller societies, will consolidate Nationwide's position as Britain's biggest building society. The Derbyshire is the Britain's ninth biggest building society, with the Cheshire ranked at number 11.

The Derbyshire has nearly 500,000 members and 50 branches while the Macclesfield-based Cheshire has an estimated 400,000 members, along with 45 building society branches and 13 estate agency outlets.

A spokesman for the Nationwide declined to comment on the possibility of windfall payments for members of the two societies. Members of the Portman – previously Britain's third largest society – received between £200 and £1,000 after a merger with the Nationwide last year.

The tie-up with the Portman left Nationwide with more than 900 branches and 14 million members. The Swindon-based firm has been one of beneficiaries of the downturn in the financing and mortgage markets because savers have deserted banks and smaller building societies in a "flight to safety".

It said last night: "The board of Nationwide Building Society can confirm that it is in advanced discussions...over the terms of independent and proposed mergers. Further announcements will be made once those discussions have concluded."

While both sets of discussions are at an advanced stage, it is thought the talks relating to the Derbyshire are nearer to completion.

They are understood to have been instigated by chief executive of the Derbyshire Graham Picken during the early summer when deteriorating credit markets prompted him to decide that his members' savings would be better placed in the hands of a larger, better capitalised rival.

It is believed to be one of a number of merger discussions currently taking place in the building society sector as smaller groups look for merger partners to provide greater security to customers.

Nationwide opened 1.5m new savings accounts in its last financial year. However, the mutual's share of the new mortgage market shrank to 7.1 per cent – compared with 11 per cent a year ago – as it looked to focus on quality.