Members of the British parliament have approved the UK’s bilateral loan to Ireland.

The legislation is expected to get Royal assent and become law within a week.

The £3.25bn will be paid out in eight equal instalments starting next September as part of its contribution to the EU/IMF international bailout.

Chancellor of the Exchequer George Osborne said that the interest rate would be fixed at the time each instalment is drawn down.

Mr Osborne told MPs earlier today that the interest rate on the first instalment would be around 5.9%.

During six hours of debate several backbench Conservative MPs objected to Britain being involved in the bailout of a euro zone country.

Despite those objections the legislation was passed by MPs.

Mr Osborne told the House of Commons the loan of £3.25bn will be paid in sterling so that Ireland will have to bear the exchange rate risk in the coming years.

Mr Osborne confirmed that the loan would be repaid in sterling.

The loan will be drawn in eight tranches; each tranche will have a seven-and-a-half year term.

It was anticipated that the loan would result in fees and interest of £414m for the UK, Mr Osborne said.

The Chancellor added: 'Ireland is the fifth largest market for British exporters, accounts for 5% of our total exports abroad ... every man, woman and child in Ireland spends on average £3,600 a year on British goods.

'That is how connected our economies are.'