LONDON BRIEFING:UK premier was praised for rescue plan, but winning the next election may be tougher, writes Fiona Walsh

FROM ZERO to hero . . . as stock markets around the world rebound on the back of the co-ordinated bank bailout schemes, Britain's lame-duck prime minister is enjoying a rare moment of glory.

Slammed for his dithering and virtually written off a few weeks ago, Gordon Brown is now being hailed as the driving force behind the global financial rescue plan - the man who helped haul the world back from the brink.

As Britain's £500 billion bailout plan for the banks and money markets was being replicated throughout the world, praise for the prime minister came from some unusual quarters. One of the most effusive endorsements came from the newly-crowned Nobel prize winner for economics, Princeton professor and New York Times columnist Paul Krugman.

In his column on Monday, the day his Nobel award was announced, Krugman posed the question: "Has Gordon Brown, the British prime minister, saved the world financial system?"

While admitting the question was premature - we have a long way to go before we are in the clear - Krugman lauded Brown and chancellor Alistair Darling for defining the character of the worldwide rescue, with other wealthy nations playing catch-up.

It was, he said, "an unexpected turn of events", but the Brown government had shown itself "willing to think clearly about the financial crisis, and act quickly on its conclusions".

The part-nationalisation plan for the banks unveiled by Brown echoes the actions of the Swedish government in the early 1990s, when its banks faced ruin after a spectacular housing bubble burst. The Swedish economy emerged a few years later in good shape, although the government still retains some of its bank shares more than 15 years later.

A similar solution is said to have been privately favoured by Ben Bernanke, chairman of the US Federal Reserve. However, Treasury secretary Henry Paulson, having allowed Lehman Brothers to fall, went instead with the $700 billion plan to mop up toxic assets, the key disadvantage of which was the time it would take to come into effect.

The US has now followed Brown's lead and it will be a long time before Washington forgets the humiliation of having to play catch-up with Britain and the rest of Europe.

For Brown, it is a remarkable turnaround. For months the British premier has been hanging onto his job by his fingertips, slated not only by the public and opposition MPs, but also by some of his most senior cabinet colleagues.

He should enjoy his moment in the sun, for it may be a brief one. Even if the bold bank scheme works, there is a long haul ahead and the looming recession to grapple with. The International Monetary Fund last week slashed its growth forecasts for Britain from 1.7 per cent to -0.1 per cent and the signs of pain in the real economy are everywhere to be seen.

Profit warnings are piling up - 111 from quoted companies in the three months to September 30th, according to Ernst Young, more than one-third up on the corresponding period in 2007. As Ernst Young warns, the worst is almost certainly yet to come for UK corporates.

On Tuesday, the Royal Institution of Chartered Surveyors reported the number of housing transactions has fallen to an all-time low of less than one a week for each estate agent, while the British Retail Consortium said shop sales have collapsed to their lowest level in six months.

Mortgage rates are still rising despite the emergency rate cut last week and unemployment figures due today will fuel fears that Britain is well on the way to seeing two million people lose their jobs by Christmas.

According to shadow chancellor George Osborne, the cost to the taxpayer of Brown's bold plan is equivalent to every British family taking on debt of £11,000 - the biggest increase in debt by any peacetime government.

Supportive of the need to stabilise the financial system, but enraged by Brown's new heroic status, the opposition will be keen to remind voters in the months ahead of the part their prime minister played in creating the crisis in the first place. After all, he spent 10 long years as chancellor and presided over the years of easy credit and the deregulation of the banks that went so disastrously wrong.

Winning plaudits on the international stage and praise from a Nobel prize-winning economist is all very well, but Brown's biggest test will come at the ballot box.

Persuading the British public in the grip of recession to return him to Number 10 in the next election could prove a tougher challenge than saving the world financial system.

Fiona Walsh writes for the Guardiannewspaper in London