Iceland's central bank has attempted to get money flowing in and out of the hobbled economy, routing all payments through its own accounts and blaming UK banks for withholding funds from Icelandic companies.

International money transfers have virtually stopped since its banking system collapsed last week, with flows between Iceland and the UK at a standstill. It has left Icelandic exporters starved of their foreign currency earnings and desperate for help.

"It seems to me the English banks and government is holding Iceland in a siege," said Hyörtur Giflafonsson, owner of Örgovik, a fish exporter. "If this siege continues we will be thrown backwards 20 years."

The central bank has asked all commercial banks abroad to route payments through it, a move it hopes will restore trust. However, several exporters said UK banks were refusing even to ship money via the central bank. Mr Giflafonsson said one customer in London was trying for the fourth time to find a bank willing to transfer his payment.

Svavar Svavarsson, marketing director at HB Grandi, Iceland's biggest seafood company, said it had not received any money from UK banks even via the central bank, though money from other countries' banks was arriving.

The central bank said some foreign banks were not transferring funds for fear they would not reach the right party. The problem was "by far most difficult vis-à-vis British counterparties, which is directly attributable to the extremely harmful actions taken by the British authorities".

The UK Treasury denied it was to blame. "The UK government has taken no action to restrict commercial transactions with Icelandic banks except for the freezing of Landsbanki assets within the UK."

Additional reporting by Jim Pickard in London