Up to £4bn worth of Lloyds bank shares will be offered to small investors at below-market prices if the Conservatives win the election, David Cameron is to announce.
The offer would be part of the £9bn sale of shares in the bailed-out bank announced in the Budget in March.
Mr Cameron will say later that it marks another step in the journey “we have been making in repairing our banks”.
Buyers who keep their shares for a year will be rewarded with a loyalty bonus.
It will include one additional free share for every 10 shares that they still hold.
Mr Cameron is expected to confirm that, with Lloyds shares closing at 78.75p on Friday, those offered to individual investors will be sold for more than the 73.6p a share paid by the previous Labour government when it bailed out the bank following the financial crash of 2008.
Policy guide: Economy
This issue includes the wider economy and deficit reduction but also employment and the role of business.
‘More secure future’
The prime minister is due to say: “The £20bn bailout of Lloyds Bank by the last Labour government became a symbol of the crisis that engulfed the British economy under Labour. After the public bailed it out, people feared they wouldn’t see their money returned.
“Today they are. Today’s announcement marks another step in the long journey we have been making repairing our banks, turning our economy around and reducing our national debt, only made possible by our long-term economic plan.
“That’s why it is so important that we don’t put all that progress at risk, but instead build on what we’ve done so we can deliver a brighter, more secure future for our country.”
By Chris Mason, BBC political correspondent
It is known as a retail share offer: but it also amounts to a retail political offer.
Elect a Conservative government, David Cameron will say, and we will make shares available to the public – and not just to institutional investors such as pension funds.
The Tories hope that now the Lloyds share price is above the amount the previous government paid for the shares they can be sold at a profit to the taxpayer.
For the second time in a week – after their announcement offering the right to buy housing association homes in England – the Conservatives are again reviving an idea pioneered by Margaret Thatcher that they hope will be popular.
Labour said this was the seventh time David Cameron had announced the plan to sell Lloyds shares.
Under the terms of the retail offer, buyers will receive a discount of at least 5% on the market price at the time of the sale, with priority being given to investors purchasing up to £1,000 worth of shares.
The minimum purchase will be £250 and there will be a maximum limit of £10,000.
The government has already raised £9bn from the sale of Lloyds shares, and the state’s stake in the bank – which was 43% at the time of the bailout – is now down to 22%.
The proceeds from the latest offering will be used to pay down the national debt.