A deal to write off the debts owed by poor countries to the World Bank, the IMF and the African development bank moved a step closer last night when Canada agreed to back Britain's plans for total cancellation.

Ahead of tomorrow's gathering of finance ministers and central bank governors in London, Canada said it would pay its share of the debts owed by heavily indebted countries to the international institutions for the next 10 years.

Britain and Italy have already agreed to a similar proposal, and France has signed up to the initiative in principle, thereby raising hopes that the other members of the G7 - Germany, Japan and the United States - will also come on board.

Canada's finance minister, Ralph Goodale, said: "This will provide low-income nations with the opportunity to invest in the future of their people, and not the debt obligations of the past."

In the first round of debt relief at the end of the last decade, the focus was on debts owed to individual countries. Now attention has switched to the money owed to the international organisations.

The chancellor, Gordon Brown, has suggested that rich countries should each pay a proportion of the debts owed to the World Bank and the African Development Bank, with the IMF debt covered by a revaluation of the Fund's gold reserves.

Canada said it would be providing $172m in a first tranche over the next five years, but was lukewarm about revaluing IMF gold.

Mr Brown said: "I congratulate minister Goodale on the bold announcement that Canada will pay their share of 100% relief on multilateral debt.

"This will release vital resources to be reallocated to education, health and infrastructure in the poorest countries.

"The UK welcomes Canada's action and calls on other countries to follow their lead to bring an end to the tragedy of unpayable debt."