The payments of $83.25 million (42.4 million pounds) to the United States and $22.7 million to Canada will close the final chapter of the war and mean that in total the country has paid close to twice what it borrowed in 1945 and 1946.

"This week we finally honour in full our commitments to the U.S. and Canada for the support they gave us 60 years ago," Treasury minister Ed Balls said on Thursday.

"It was vital support which helped Britain defeat Nazi Germany and secure peace and prosperity in the post-war period. We honour our commitments to them now as they honoured their commitments to us all those years ago," he added.

Britain borrowed a total of $4.3 billion from the United States in 1945, followed in 1946 by a loan of $1.2 billion from Canada -- both at an interest rate of just two percent.

During World War Two, the United States effectively gave Britain billions of dollars worth of goods under the lend-lease programme.
But that abruptly ended in September 1945 despite the fact Britain was on its knees economically after six years of warfare.

Despite the heavily discounted rate of interest on the loans, in the intervening years Britain has failed to make any payments on six occasions because of balance of payments problems -- in 1956, 1957, 1964, 1965, 1968 and 1976.

To date the country has paid a total of $7.5 billion to the United States and $2 billion to Canada.

The Treasury noted that there were still World War One debts owed to and by Britain, but that no action had been taken on either count since U.S. President Herbert Hoover declared a moratorium in 1931 during the Great Depression.