Oil-rich emirate Abu Dhabi has helped out debt-laden neighbour Dubai with Â£6 billion in emergency funds to repay debts.
Embattled property division, Dubai Worldâ€™s Nakheel, will use about Â£2.5bn of the money to pay off an outstanding debt.
Support to local banks will be provided by the United Arab Emirates central bank, which is based in the federationâ€™s capital, Abu Dhabi.
Dubai Worldâ€™s interest expenses and general business needs through to the end of April will be paid off with the funds provided by Abu Dhabi. The fund will also be used to pay bills owed to â€œexisting trade and creditors contractorsâ€.
â€œThe government of Dubai is particularly focused on addressing the concerns of Dubai World trade creditors within the emirate of Dubai,â€ Sheikh Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee said.
No details of the UAE bank support were provided, but a source close to the Dubai government said the central bank would inject liquidity into local banks in relation to their possible losses from Dubai World.
â€œThe goal here is to provide a stable framework so we can provide a restructuring,â€ the source said.
Dubai also said it planned to announce a reorganisation law that could be used in case Dubai World was â€œunable to achieve an acceptable restructuring of its remaining obligationsâ€.