Mark Hobarn, UK Treasury minister, made the comments as banks were reported to be meeting to discuss reducing the size of potential pay outs for 2011.
Financial institutions in the UK are discussing cutting the size of the potential bonus pool from Â£7 billion to Â£4 billion, the BBC reported.
However, the British Bankersâ Association (BBA) claimed that it did not recognise the financial figures quoted by the broadcaster and denied hosting any discussion on reducing bonuses.
Mr Hobarn, who was quoted by Bloomberg, said: âThe bonus round will go on when there is significant fiscal consolidation. A lot of people are going to face tough times ahead. Banks are going to have to think very carefully about the bonus round.â
The comments come as banks are expected to face increasing scrutiny over the size of the bonus packages paid out, especially as the British government recently announced cuts to its program of public spending.
During the previous week, the Financial Services Authority circulated new proposals surrounding pay disclosure at UK banks.
The new rules are expected to be implemented in 2011 and apply to remuneration provided to staff during this year.
By Jim Ottewill