Long queues have formed at cashpoints across Cyprus as savers race to withdraw their savings or face a levy of up to ten per cent.
The Daily Mail reports that President Nicos Anastasiades has struck the deal with European finance chiefs as a condition for the 10billion euro bailout of the island's banking system, which is in a 'state of emergency'.
According to Sky News, Cyprus's parliament was due to vote on the proposed plans this afternoon, but this has now been pushed back to Monday.
The move has sparked violent protests across Cyprus, as restrictions have already been imposed to stop people emptying their bank accounts or moving their money out of the country.
British expats and UK troops based in Cyprus will also be affected if the levy goes ahead, as a 9.9 per cent charge will be seized from all bank deposits over €100,000, while those who have saved less will pay 6.75 per cent.
The European Central Bank said that Britons have £1.7billion deposited on the island, which means that they could lose up to £170million as a result.
Shirley Brooks, 61, originally from Manchester, told the Daily Mail: "I am extremely angry. This is our retirement money, and there was no warning that this was coming. I don't think we should have to pay anything as we did not cause the problems in the economy."
Sky News reports that Chancellor George Osbourne announced that any UK Government and military personnel would be compensated if their personal savings accounts were subject to the levy. However, the 59,000 British residents of Cyprus could still find themselves out of pocket.
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