LONDON (Reuters) - Britain's government said on Friday it had sold off another 1 percent of its stake in Lloyds Banking Group (>> Lloyds Banking Group PLC), trimming its total interest in the bailed-out lender to below 11 percent.

UK Financial Investments, which manages the government's stakes in taxpayer-supported Lloyds and Royal Bank of Scotland (>> Royal Bank of Scotland Group plc), has now recouped 15.5 billion pounds of the 20.5 billion pounds of taxpayer cash required to rescue Lloyds during Britain's banking crisis in 2008, Lloyds said in a statement.

News of the latest share sale comes in the same week that the British finance ministry said it would sell at least 2 billion pounds worth of Lloyds shares to private retail investors in spring 2016 to return the bank to full private ownership.

The sale is set to be the biggest privatisation in Britain since the 1980s, when Margaret Thatcher's government sold 3.9 billion pounds worth of shares in British Telecom and 5.6 billion pounds worth of British Gas shares.

The finance ministry began selling off its 43 percent stake in September 2013.

UKFI has sold 14 percent of the bank since appointing Morgan Stanley in December to execute a trading plan that seeks to sell the government's shares daily on the stock market.

(Reporting By Sinead Cruise, editing by Simon Jessop)