Iceland's president bounced the ball back into Gordon Brown's court after voters overwhelmingly rejected a plan to pay Britain and the Netherlands billions for losses in the Icesave bank collapse.

Icelandic President Olafur Ragnar Grimsson, whose refusal to sign the compensation bill voted through parliament in December led directly to the referendum, challenged Britain's prime minister to settle the matter.

'Gordon Brown should now step forward and ensure the next steps to guarantee a solution that everyone can accept,' he said.

Final results yesterday of the weekend referendum on the deal showed that 93.2% of voters had rejected it. That sent Iceland's government back into talks with London and The Hague to find a solution more acceptable to the country's voters.

Britain's Treasury and the Dutch finance ministry have both described the referendum results as an internal matter for Iceland. Both countries have already said they are ready for further talks on the matter.

British finance minister Alistair Darling told the BBC yesterday: 'The fundamental point for us is that we get our money back - but on the terms and conditions and so on, we're prepared to be flexible'.

About 230,000 Icelanders were called to polling stations on Saturday to say whether the country should honour a deal to repay Britain and the Netherlands €3.9 billion, at 5.5% interest, by 2024. This would be to compensate the two countries for money they paid to 340,000 of their citizens hit by the collapse of Icesave in 2008.

Grimsson congratulated Iceland's voters Sunday for sending a clear message. He had already argued that Icelanders were willing to agreement a settlement.

Reykjavik has for weeks been attempting to hammer out a new agreement with Britain and the Netherlands. Under pressure from the opposition, the government even turned down a more favourable offer than the one voted down on Saturday.

Some observers had warned that a 'no' vote might delay the payment of the remaining half of an International Monetary Fund rescue package worth $2.1 billion. There were also fears it could hit European Union and euro currency membership talks, as well as Iceland's credit rating.

But a European Commission spokesman said of the result: 'This is a subject which it is for the Icelanders to have their say on.'