Investment bank Goldman Sachs has given in to pressure from the government and the Bank of England governor Sir Mervyn King and backed down from plans to defer bonus payments.

The bank had planned to delay payments until after 6 April, allowing staff to avoid the 50% rate, which then drops to 45%.

King criticised the bank after hearing of its plans, telling a Treasury Select Committee: 'I find it a bit depressing that people who earn so much seem to think that it's even more exciting to adjust the timing of it to get the benefit of the lower tax rate which they will benefit from in the long run to a very great extent knowing this must have an impact on the rest of society, when even now it is the rest of society which is suffering most from the consequences of the financial crisis.'

In addition, the Treasury put pressure on the bank behind the scenes, the Guardian reported, when Treasury minister Sajid Javid called the bank's senior executives late Monday, the day before a scheduled remuneration committee meeting, to seek assurances that it would not go ahead with plans for deferred payments.

The pay committee was set to meet ahead of a larger meeting in which staff will be informed of their bonuses amid predictions that Goldman is set to defy the downward salary trend of City workers, boasting increased pay levels.

Predicted average pay per employee at Goldman is expected to rise from around £238,000 to £260,000, according to Sanford Bernstein analyst Brad Hintz.

Former Treasury spokesman for the Liberal Democrats in the Lords, Lord Oakeshott, also waded into the fracas, saying that if Goldman wanted to keep working for the government on major products, the bank could not 'spit in taxpayers' faces.'

'It's high time they behaved like good citizens, not barrow boys,' Oakeshott said.