The City watchdog has published a guide to help people manage debt after revealing 20 per cent of families now owe an average of £2,000.

The guide by the Financial Services Authority (FSA) -

Taking Control - has been launched when many people may face a financial hangover following a Christmas spending spree.

It advises people with debt to draw up a budget so they know how much they can afford to repay each month.

They should contact lenders if they are experiencing problems meeting repayments to see if they can pay a smaller amount, the guide says.

It also contains a five-step plan to help people take control of their finances, including drawing up long-term financial goals and shopping around for the best products.

Chris Bernthal, of the FSA, said: "Before consumers think about making financial commitments, it is critical they find a way to manage existing debt.

"If you have a serious problem with debt, it's best to face up to it."

The research found 6.1 million families are finding it difficult or moderately difficult to repay their debts, with those living in Greater London and the South-East most likely to be experiencing problems.

Copies of the guide are available from post offices or by calling the FSA's consumer helpline on 0845 606 1234.