LONDON (Reuters) - Britain will raise at least 9 billion pounds ($13 billion) selling shares in Lloyds Banking Group (>> Lloyds Banking Group PLC) in the coming year as it looks to recover 66 billion pounds of taxpayers' money spent bailing out banks in the financial crisis.

The government also said it would sell 13 billion pounds worth of home loans held by bailed out Northern Rock and Bradford and Bingley.

Britain spent more than 20 billion pounds rescuing Lloyds during the crisis of 2007-9, leaving it with a 41 percent shareholding. Another 45 billion pounds was spent bailing out Royal Bank of Scotland (>> Royal Bank of Scotland Group plc).

"Five years ago they (Labour) were bailing out the banks, now we're selling more bank shares," Chancellor George Osborne said in his last budget before a national election in May.

As part of further measures aimed at making banks play their part in Britain's economic recovery, Osborne said he was increasing the rate of a bank levy to 0.21 percent of a lender's assets from 0.16 percent.

"The banks got support going into the crisis, now they must support the whole country as we recover from the crisis. I believe they can make a bigger contribution to the repair of our public finances," he said.

The measure, the eighth increase since the levy was introduced in 2011, will raise an additional 900 million pounds a year.

"The bank levy is making many banks move work and jobs to other parts of the world, and is deterring international banks from investing in the UK," said Anthony Browne, chief executive of the British Bankers Association.

The government has so far raised 8.5 billion pounds selling Lloyds shares, cutting its stake to under 23 percent. It said any further sales will be subject to market conditions and getting value for taxpayers.

Shares in Lloyds closed on Wednesday at 79.5 pence, comfortably above the government's 73.6 pence buy-in price.

The planned sales would take the government's stake in Lloyds to about 7 percent, based on current share prices.

UK Financial Investments (UKFI), which manages the government's stake, said Lloyds' decision to re-start dividend payments has made the stock attractive to a broader range of investors, including income funds.

"There are now more options to sell shares in different ways. I also expect to be able to undertake larger transactions than have been possible to date," said UKFI Chairman James Leigh-Pemberton in a letter to Osborne dated March 13.

UKFI sold Lloyds shares in two tranches to financial institutions in September 2013 and March 2014. It has adopted a different approach since, appointing investment bank Morgan Stanley to sell shares in the open market.

(Editing by Sinead Cruise and Elaine Hardcastle)

By Matt Scuffham and Steve Slater