The UK's largest housebuilder said that securing a "comprehensive financing structure" was essential in the current market conditions and that its banks have indicated their intention to agree a revised set of banking covenants.

"To that end the board has decided to extend the current discussions with debt providers to include applicable Eurobond holders, which will prolong the negotiation process," it said in a statement yesterday.

Taylor Wimpey has previously indicated it would breach its interest cover covenant by February unless it agrees a new financing package.

One analyst, who declined to be named, said should Taylor Wimpey breach its bank debt or its US private placement debt conditions, bondholders could "cry default" and press for an early redemption of their £450m in bonds.

The analyst said the extension of the discussions brought the eurobond holders into the main arena and was "recognition of the presence of the threat".

Shares in Taylor Wimpey closed up 1/4p at 343/4p yesterday, having earlier fallen as low as 311/2p.