The government has off-loaded another £500m of its Lloyds holding. Reuters

The government has sold a further 1% of the stake it holds in Lloyds Banking Group, adding another £500m to Treasury coffers.

The sale, held by the government's UK Financial Investments, repeats last month's £500m fundraising and brings taxpayers' interest in the bank to 22.98%.

The action mirrored last month's sale - part of a six-month plan announced by Chancellor George Osborne in December 2014 to raise funds for the public purse and accelerate Lloyds' return to private hands.

When the government began its plan to return Lloyds to private ownership following the financial crash, it held 40% of the bank. The share sales, which being managed by Morgan Stanley, have thus far recouped £8.5bn.

Chancellor Osborne said: "I am delighted that we've raised a further £500m for the taxpayer through the trading plan. These sales are part of our plan to return Lloyds to the private sector and get taxpayers' money back. The proceeds will be used to reduce the national debt."

The shares were sold above the average price of 73.6p paid for them when Lloyds was bailed out. In February 2015, Lloyds reported sturdy earnings and announced plans to start paying dividends again for the first time since its collapse.