The independent website – which can be found at www.lenderscompared.org.uk – is being set up following recommendations by the Competition Commission on how to improve the home credit market.

Home credit lenders offer short-term, small loans, often of as little as £100, to people on low incomes. Repayments are collected in weekly or fortnightly instalments from people's homes.

But charges for the loans are high, with customers paying the equivalent of 177 per cent interest in APR terms, while the Competition Commission's recent investigation found that people were being overcharged by up to £100m a year due to a lack of competition.

The new website will enable consumers to shop around for the best deal by comparing the rates of different loan providers in their area.

It will also show the other options available to people who need to borrow small sums of money, such as taking out a loan through a local credit union.

All lenders who conduct a significant amount of home credit business are obliged to publish details about their loans on the website, and they will face enforcement action from the Office of Fair Trading if they fail to do so.

Home credit lenders will also be required to publish details about the website on their own websites, payment books, statements and flyers.

The website is being overseen by a governance board that includes representatives from the Office of Fair Trading, National Consumer Council, the Association of British Credit Unions and the home credit industry.

It is part of a package of measures that hope to open up the sector to greater competition.

Other moves include requiring lenders to share data on customers' payment records to give rival companies the information they need to compete for business, and ensuring that customers who repay their loans early get a fair rebate.