A crushing blow could have been struck in the battle against ”legal loan sharks” after the town hall banned them from their computers and advertising hoardings.

Under the plan – unveiled by Islington Council’s finance chief last week – so-called pay day loan companies will not be allowed to stick their posters up on any council-owned billboards and will have their websites blocked from all council computers, potentially including libraries and learning centres.

Pay day loan companies offer cash designed to keep people afloat until their wages come in, but have come under fire for their often very high rates of interest – rates of 5,500 per cent APR are not uncommon.

Cllr Richard Watts, Islington Council’s executive member for finance, said: “Payday loan companies rip-off Islington residents with sky-high interest rates that exploit some of our most vulnerable neighbours. We are determined to do what we can to protect our residents from these legal loan sharks.”

He added: “We are not helped by the Tory-led government changing the planning rules to making it much harder for us to stop payday loan shops opening on our high streets.”

“Council Leader Catherine West has already asked the Mayor of London to stop payday loans advertising on bus stops in the borough but, shamefully, he has refused.

“I would urge anyone thinking of getting a payday loan to contact the London Credit Union on 020 7561 1786 – you’ll get a much better deal.

Earlier this month, Islington Council became the first to challenge the government’s new General Permitted Development Order, which allows exisiting shops to be transformed into to pay day loan or betting shops without planning permission.

It has issued an Article 4 direction to bring some of these powers back under council control, meaning that a planning application will be required; and is seeking a judicial review of the ‘‘office to residential’’ rule and the way in which the government decision was made on granting exemptions.

The council has also sent out thousands of letters to local businesses to persuade them against converting into a betting shop or payday loan business.

Payday loan companies are also being targeted by the church. Last week the Archbishop of Canterbury is said to have told online payday loan firm Wonga that the Church of England wants to “compete it out of existence” by supporting credit unions.