A SPY from Highbridge who helped thousands of Jews flee Nazi Germany is set to be honoured with a new statue after George Osborne promised funding for the memorial.

Highbridge-born Major Frank Foley, who has been dubbed 'the British Schindler', tore up the rulebook in order to provide travel papers for Jews facing persecution after Adolf Hitler's rise to power, using his official position as a passport control officer in Berlin to aid their escape.

The Chancellor said a memorial in Dudley, where Major Foley retired, would be supported with the proceeds of fines from banks caught up in the Libor rate-rigging scandal.

At an event in Parliament, Mr Osborne also promised an extra £500,000 for the Holocaust Educational Trust, which organises school visits to concentration camps as part of its work.

Pledging support for the new statue of Major Foley, the Chancellor said: "We will definitely put financial support into building that."

He said Major Foley "in the very best sense of the words, used and abused his position to give many, many visas to German Jews who were trying to get out of the country", helping them reach Britain or Palestine.

Without the benefit of diplomatic immunity, the spy chief was "putting himself at considerable personal risk" by handing out visas and visiting concentration camps to rescue Jewish prisoners.

"There have always been people who have been prepared to stand up and be counted, risk their own lives, rather than walking by on the other side of the road," Mr Osborne said.

"Even in the darkest times for humanity, there were points of light."

Dudley North's Labour MP Ian Austin, the son of a Czech Jewish immigrant who fled the Nazis, said Major Foley was a 'great British hero'.

"At great personal risk he saved thousands of Jews from certain death and then he retired in complete anonymity," he said.

Mr Austin said the Chancellor's announcement was "fantastic news and completely unexpected".

"It's brilliant news that the Chancellor is going to fund a permanent tribute so that people can learn about Frank Foley's heroism," he said.

The Labour Party has been hit by a series of anti-Semitism allegations in recent weeks and Mr Austin said more needed to be done to tackle the problem wherever it occurred.

"I think wherever anti-Semitism is found people have got to stand up and confront it and root out this ugly prejudice," he said.

Asked if enough was being done within Labour, he said: "We have all of us got to do everything we can to confront anti-Semitism wherever it is found."

A statue commemorating Major Foley was erected in 2005 near his birthplace in Highbridge, Somerset.