Eric Daniels, Lloyds' former chief executive, will lose £580,000 or 40% of the 2010 bonus he was due to be awarded in deferred shares.

Daniels is taking the biggest hit with four other directors set to lose around 25% of their awards and all other members of the group executive committee to give up 5% of their 2010 bonues.

Lloyds said: "The bonus pool for 2011 will reflect a further reduction in respect of the above mentioned provision, which will affect all individuals eligible to be considered for a discretionary bonus for that year.

"The Board wishes to emphasise that its decision is based entirely on the principle of 'accountability'and in no way on culpability or wrong-doing by the individuals concerned."

The board said its decision was based on the outcome of the Judicial Review into Payment Protection Insurance (PPI) in April 2011. 

"Had the consequential provision made been effected at the time of the award of the 2010 bonus in February 2011, the bonus pool would have been lower and individual bonus awards would also have been lower," said a Lloyds spokesperson.

The FSA has urged banks to claw back bonuses paid out to those who were in charge when Payment Protection Insurance was sold, but no bank has done so until now.

Lloyds directors who will lose a quarter of their 2010 bonuses are Tim Tookey, the outgoing finance director, Helen Weir, the former head of the retail bank, Truett Tate, the head of Lloyds' corporate and investment bank who retires this month, and Carol Sergeant, Lloyds' former head of risk.

According to the Telegraph, Tookey will forgo £235,000 of his £942,000 bonus, Tate £260,000 of his £1.05m award and Weir £218,000 of her £875,000 bonus. Sergeant is also thought to have had to hand back about £100,000.

The bank is able to claw back the bonuses, made in shares, because the award was released over three years, so future payments will not now be made.

The decision could pave the way for clawbacks at rival banks. Royal Bank of Scotland, which is 83% owned by the taxpayer, was the second largest player in the PPI market behind Lloyds.

Lloyds, which is 41% state owned, is expected to announce around a £4bn loss this Friday as a result of the scandal, while RBS is forecast to post a loss of up to £1bn.