Figures from Apacs show that bank losses from Internet fraud more than trebled to £14.5m last year. But a survey of 1500 Internet users conducted for the FSA's Financial Risk Outlook report found that if banks decided to shift liability of the losses towards the consumer, the vast majority would stop using the services.

The FSA says nearly all users (95%) surveyed believe that at least some security responsibility should lie with the bank, while just under half (45%) say banks should take sole responsibility for fraud.

But while many Internet users are protecting themselves by installing security applications on their PCs, the research shows that over a quarter did not know when they last updated their software or updated it infrequently. Around five per cent of online bankers have no security software installed on their PC at all.

Philip Robinson, financial crime sector leader at the FSA, says most consumers recognise they have some responsibility for security but are not necessarily following this obligation through.

"To tackle the losses associated with fraud, banks should continue to drive security and this must include educating consumers on the importance of protecting themselves," says Robinson.

The FSA is warning banks that fear of fraud is already causing customers to limit use of Web banking services and consumer confidence in online banking is "fragile".

The regulator is calling on banks to do more to educate customers about security, and says that even those who use the Web regularly are either "extremely" or "very" concerned about the risk of fraud when making an online transaction.

In an effort to stem online fraud losses, more banks are actively promoting the use of security technology among their online banking customers.

Earlier this month Barlcays Bank said it was teaming with security software vendor F-Secure to provide discounted anti-virus and spyware technology to its online banking users. While in September rival high street bank Lloyds TSB partnered with Internet security firm Zone Labs to provide its customers with a free PC security scan and discounted anti-virus software.

Last year Lloyds TSB also began trials of a Vasco security device that generates single-use passwords in a bid to protect its Web banking customers from phishing and spyware scams. The key-ring sized devices are being rolled out to 30,000 Internet banking customers.