David Cameron will not stop the Royal Bank of Scotland awarding other bonuses to its executives, a Downing Street spokesperson has said.

RBS chief executive Stephen Hester decided to turn down his £963,000 bonus after coming under sustained pressure from politicians, the media and the public.

Labour had threatened to call a Commons debate on the issue as RBS is 83% owned by the taxpayer.

But a Downing Street spokesman said today: "We are not going to micro-manage bonuses. They are doing a good job and making good progress."

According to the Press Association the spokesperson said the prime minister's view was that he wanted the bonuses to be lower but that "reward for good performance is not in itself a bad thing."

"He always made it clear that it was a matter for Mr Hester whether he took that bonus or not and that should remain the case," she added.

Asked whether the government feared senior executives at the bank may jump ship rather than face public a backlash over bonuses she said: "It is important that we have a good team in place that will help make the bank a sustainable and viable business going forward, which is helping to lend money to businesses and consumers."

Labour leader Ed Miliband welcomed Hester's decision to turn down his bonus, but warned that such an ad-hoc approach was not sustainable.

“If we don’t deal with the issue of bankers bonuses in a proper, systematic way this kind of thing is just going to re-occur," he said.

“This isn’t the best way of setting the pay for top chief executives. That is why we need real change. Real change in the board room and new rules, and real change from government to say tax the banker’s bonuses.”

Shadow Treasury minister Chris Leslie said the furor over Hester's bonus had opened the way for a wider debate about the role of the government setting the policies for the state owned banks and "the extent to which the tax regime ought to be sterner when it comes to these bonuses and claw back some of that money".

"The government are in charge, the Prime Minister was out-of-touch on this issue and he has really got to step up to the plate and show some leadership now," he said.

The chairman of RBS, Sir Philip Hampton, announced on Saturday that he would not receive a shares bonus worth £1.4m as it would be inappropriate.