By Huw Jones

LONDON, June 30 (Reuters) - Britain's markets watchdog proposed on Thursday giving banks an extra three months to stop using a "synthetic" version of sterling Libor and left the door open to a dollar counterpart.

Once dubbed the world's most important number, Libor or the London Interbank Offered Rate, has been used globally to price everything from mortgages and student loans to derivatives and credit cards, all worth trillions of dollars.

Regulators want to end use of Libor after banks tried to rig it, replacing it with rates compiled by central banks such as the Federal Reserve, European Central Bank and Bank of England.

Compiled in five currencies, Libor was largely phased out for new contracts at the end of 2021, with a synthetic version for sterling and yen Libor introduced to give banks time to transfer outstanding contracts to a central bank rate.

"Market participants have told us previously that they would value having a period of notice before the cessation of synthetic sterling Libor," Britain's Financial Conduct Authority said in a consultation paper on Thursday.

"To ensure adequate notice, we are seeking views on ceasing the requirement to continue publication of the one- and six-month sterling Libor settings at the end of March 2023 instead of end-December 2022," the FCA said.

Synthetic yen Libor will cease at the end of 2022, as planned, the FCA said.

Some dollar denominated Libor rates are still being published but they are due to cease mid-2023.

"We are also seeking views on any challenges or issues that might result from the publication of any U.S. dollar Libor settings on a synthetic basis," the FCA said.

The FCA said it would assess https://www.fca.org.uk/publication/consultation/cp22-11.pdf whether dollar Libor could be ended without the need for a synthetic version and said market participants should not rely on any synthetic Libor being published.

Any synthetic dollar Libor would follow a similar model to the synthetic versions of sterling and yen Libor, the FCA said.

(Reporting by Huw Jones; Editing by Edmund Blair)