DUBLIN (Reuters) - Ireland's government outlined a compromise solution for winding down nationalised Anglo Irish Bank yesterday but failed to put either a price or an exact timeframe on burying the fiscal and economic deadweight.

Uncertainty over the final bill for sorting out its banks' decade-long property binge has re-ignited fears of an Irish debt crisis and investors will have to wait a number of weeks before a price is put on the demise of Anglo, a poster child for reckless lending and scandal.

"Resolution of this, our most distressed institution, is essential to the promotion of confidence and stability in our financial system," Finance Minister Brian Lenihan said.

Irish debt spreads narrowed a touch but remained close to euro lifetime highs while Irish bank stocks were largely unchanged after the announcement.

"We're still none the wiser really. Okay it tells you the route they're going, but I don't think it gives you any clarity on the amount of money it's going to cost the exchequer which is what the market is worried about," said Alan McQaid, chief economist at Bloxham Stockbrokers.

"I don't think the market gives a hoot one way or the other if it's a 'good bank/bad bank' or if it's wound up, the issue is how much it's going to cost."

Yielding to political pressure, Lenihan ditched Anglo Irish's ambitions to carve a functioning niche lender out of what is left of the bank when it transfers 36 billion euros in property loans to Ireland's state run bad bank.

Instead, Anglo's remaining loans of around 38 billion euros will be housed in an asset recovery bank, where they will be worked out over a period of time or sold off while its deposits will be put into a state-backed bank which will not lend money.

Ministers declined to give an exact timeframe for the workout of Anglo's loans, though Prime Minister Brian Cowen said it should take no more than 15 years.

Mindful that the mention of a wind-down could trigger an outflow of some of Anglo's 23 billion euro customer deposits, Lenihan was at pains to stress all deposits were guaranteed.

The "savings bank" will also help provide funds for the asset recovery bank, lessening the immediate burden on the state.

The capital cost of the new structure will be known by October when the central bank announces its capital requirements. The European Union said it viewed the plan positively but said aspects of it still needed to be clarified before it could give it a green light.

Giving both units' banking licences will give them access to cheaper central bank funding and means that Dublin will not have to consolidate Anglo's liabilities onto its general government debt, avoiding a nasty headline figure.

Even before yesterday's plan was unveiled, the capital cost of propping up Anglo Irish was expected to cost taxpayers around 25 billion euros or 15 percent of GDP but that figure will likely rise due to the additional requirements of the two new units created under Lenihan's plan.