America's "bail-out" bill is expected to set a $700 billion limit on the amount of government funds used to buy up sub-prime mortgages and related instruments.

Sources in Washington said the figure - in the middle of ranges predicted when the bill was first announced by Treasury secretary Henry Paulson on Friday - indicated the massive and sweeping nature of the plan. The draft legislation, leaked to the media today, would also raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.

This weekend Mr Paulson is working with the Congressional leaders of the Democrat and Republican parties to win support for the bail-out bill. If both parties back his plan, the necessary legislation could be enacted by Wednesday. President George W Bush said yesterday he was adding his weight to the efforts to gain widespread political backing.

The central part of the plan will be a new agency that will buy up "toxic" financial assets from Wall Street firms. The agency will be similar in nature to the Resolution Trust Corporation, created by by the American government in the late 1980s to cope with the savings and loans crisis, when many small mutual lenders collapsed.

The loans acquired by the agency will be resold when financial markets have recovered. Paulson's announcement of the plan boosted financial markets on Friday, with the FTSE 100 recording its largest one-day gain in history

President Bush said he had acted after fearing that the troubles engulfing Wall Street would spread to Main Street. “We’re going to work with Congress to get a bill done quickly,” he said.

“I found a common understanding of how severe the problem is and how it’s necessary to get something done quickly and I think we will. The risk of doing nothing far outweighs the risk of the package, and over time we’re going to get a lot of the money back.”

He added: “People are beginning to doubt our system, people were losing confidence and I understand it’s important to have confidence in our financial system. In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn’t going to be contained to just the financial community."

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