The government’s stake has steadily come down from 43% at the time of the bailout in 2008. The £500m raised in the latest disposal means the Treasury has recouped more than half its stake in the bank.

A TR-1 “notification of major interest in shares” notice from the Stock Exchange shows the threshold crossed or reached is “below 20%” and confirms that the Treasury has disposed of the shares.

The notice also shows that UK Financial Investments Limited, a company wholly-owned by Her Majesty’s Treasury, now owns 19.93% of Lloyds shares.

The Government has raised about £2.5bn by reducing its stake in Lloyds over the past three months.

A spokesman for Lloyds Banking Group said: “Today’s announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back.

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“This reflects the hard work undertaken over the last four years to transform the group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper.”

Chancellor George Osborne (pictured) announced a trading plan in December 2014 which involves gradually selling Lloyds shares in the market in a ‘measured’ way. Osborne suggested at the time the plan would end no later than 30 June 2015.

Last month David Cameron announced plans to offer up to £4bn worth of Lloyds shares to retail investors if the Conservatives win the general election. He told the BBC small investors would be offered shares at below-market prices as part of the sale of the shares in the bailed-out bank.