The taxpayer's stake in Lloyds Banking Group has been cut to 25% after the Government raised £4.2 billion from the sale of more shares last night.
Chancellor George Osborne said the stake sale represented good value for the taxpayer and was "another step in repairing the banks".
The latest tranche of shares to be sold off involved the placing of stock with institutional investors, although it is expected that a multibillion-pound shares offering to members of the public will take place later in the year.
The Treasury sold 24% of its remaining shares in the bank last night at a price of 75.5p a share, taking its remaining holding in the bank to 24.9%. The Government has now sold 36% of its original stake in Lloyds after raising £3.2 billion from institutional investors last September.
The Treasury was left with a stake in Lloyds following its £20 billion rescue during the financial crisis, after it swallowed up troubled Halifax Bank of Scotland.
But turnaround efforts have seen shares hold steady above the 73.6p break-even level - the average price paid by the Government when the bank was rescued. Shares closed at 79.1p last night.
Chief executive Antonio Horta-Osorio dubbed Lloyds ''a normal bank'' last month after posting statutory profits of £415 million against losses of £606 million in 2012 - its first bottom-line profit since 2010.
Mr Osborne said proceeds from last night's sale will be used to reduce the national debt.
He added: "This is another step in the Government's long-term economic plan to deliver a more secure and resilient economy.
"It is another step in repairing the banks, in reducing our national debt and in getting the taxpayer's money back."