An RAF plane carrying 1m euros is flying to Cyprus from Britain as a “contingency measure” to provide military personnel with emergency loans, the Ministry of Defence says.

The move comes after a controversial one-off levy of up to almost 10% on savings in Cyprus was announced.

The money will be used for British personnel and their families if cash machines and debit cards stop working.

The tax is a condition for Cyprus to get a loan from the EU and IMF.

Cyprus needs a 10bn euro (£8.7bn; $13bn) bailout to rescue its banks.

Salary needs

A revised version of the tax, which has yet to pass through the Cypriot parliament, would mean a 6.75% levy on deposits over 20,000 euros, with those over 100,000 euros charged at 9.9%.

A debate on the bailout deal in the Cypriot parliament is now under way, but no MPs are expected to vote in favour.

The levy could affect many of the 3,000 UK military personnel in Cyprus, and up to an estimated 25,000 expatriates.

The cash – about £850,000 – is being flown out on one of the two weekly flights that travel between Britain and Cyprus. It is being carried on a Voyager aircraft, which left from RAF Brize Norton and is expected to arrive at RAF Akrotiri at about 20:00 GMT.

An MoD spokesman said the situation was being kept under review and that it would consider further shipments if required, but that the cash was a contingency and not currently due to be distributed.

“The MoD is proactively approaching personnel to ask if they want their March, and future months’ salaries paid into UK bank accounts, rather than Cypriot accounts,” they said.

“We’re determined to do everything we can to minimise the impact of the Cyprus banking crisis on our people.”

Chancellor George Osborne has already said the UK will compensate any British troops in Cyprus hit by plans to introduce the bank levy.

And British government workers would also be protected, he said