Voters in Iceland have rejected a government-backed deal to repay Britain and the Netherlands for their citizens' five billion US dollars (£3 billion) worth of deposits in a failed online bank,

Voters in Iceland have rejected a government-backed deal to repay Britain and the Netherlands for their citizens' five billion US dollars (£3 billion) worth of deposits in a failed online bank, referendum results showed - sending the dispute to an international court and plunging the economically fragile country into new uncertainty.

Sunday's final results showed the "no" side had just under 60% of the votes and the "yes" side about 40%.

The result reflects Icelanders' anger at having to pay for the excesses of their bankers, and complicates the country's recovery from economic meltdown.

It is the second time voters have defeated a bid to settle the bitter dispute stemming from the collapse of Iceland's high-flying banking sector in 2008, and the government said it would be the last.

Finance Minister Steingrimur Sigfusson said Iceland would now opt for Plan B, with the dispute going to the European Free Trade Association court, which could impose harsher terms on Iceland than those rejected in Saturday's vote.

Britain and the Netherlands said they would fight to get back the money they spent compensating their citizens who had accounts in the failed bank, Icesave.

Dutch Finance Minister Jan Kees de Jager said the referendum result "is not good for Iceland and also not good for the Netherlands.

"The time for negotiations has passed," he said. "Iceland still has the obligation to pay us back. This is now a case for the courts."

UK Treasury minister Danny Alexander said: "We have an obligation to get that money back, and we will continue to pursue that until we do."

Icelandic prime minister Johanna Sigurdardottir said the results were disappointing but she would try to prevent political and economic chaos ensuing. Mr Sigfusson said the result would have no effect on Iceland's existing debt repayments and would not derail its bid for European Union membership.DISCLAIMER:Text may be subject to copyright.This blog does not claim copyright to any such text. Copyright remains with the original copyright holder.