The Nationwide Building Society in Britain said yesterday that it plans to take legal action over Barclays Plc's decision to charge non-customers one pound when they use Barclays cash machines.

Nationwide said in a statement the Barclays proposal was against the interests of the consumer and in contravention of rules of the LINK group of ATMs in the UK. It said action would begin on September 23 unless Barclays reconsiders.

Barclays stood firm on its decision, which becomes effective on October 11.

"Barclays will defend its position vigorously," the bank, Britain's third biggest by market value, said in a statement.

Barclays joined the LINK network - which has more than 25,000 machines in Britain - earlier this year. It said in the summer that it planned a surcharge of one pound per transaction from next month on use of its cash machines by customers of other banks or building societies.

The plan sparked a storm of criticism. Barclays argues that some banks already charge their own customers for using others' ATMs but do not advertise this in advance. LINK members already receive an interchange fee to cover costs when customers of other member organisations use their machines.

"We believe Barclays's proposal is contrary to the purpose and spirit of the LINK network and would amount to a serious breach of the rules agreed by all its members," said Mr Brian Davis, chief executive of Nationwide.

"LINK exists to provide common access to a widespread cash machine network in the UK...Accordingly, we propose to take action to protect the interests of Nationwide members and the consumer at large," Davis said.

Barclays, however, said it had consulted its lawyers and was confident that the charge was not in breach of the LINK rules that could constitute any basis for legal action. It said Nationwide had not invested enough in its own ATM network.

"This is an absolutely competitive move. We welcome anybody else doing it," said a Barclays spokesman.

Barclays said it was the first bank to pre-notify its customers of its charge by introducing screen messages before any transaction takes place.

Its shares declined in an otherwise firm market for banking stocks. Barclays, a favourite of investors this year, was trading at 16.50 pounds at 1330 GMT, down 16 pence or nearly one per cent on the day.