Lawmakers in Washington believe they can force through the biggest bail-out of Wall Street since the 1930s within hours, and in doing so halt the domino collapse of American banks.

Speaking from Capitol Hill just after midnight in Washington, Republicans and Democrats said they believed that they would be able to publish an agreement on the internet today that will be voted on tomorrow.

The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price. Such a measure is designed to stop the collapse of American banks and help Wall Street to start functioning normally.

In the early hours of this morning, Henry Paulson, US Treasury Secretary, said: "We're there." Tony Fratto, spokesman for the White House, added: “We’re very pleased with the progress made tonight. We appreciate the bipartisan effort to deal with this urgent issue.”

While it was pointed out that there are remaining problems over the details of the $700 billion deal, it is clear that the option of taking stakes in banks who benefit from the bail-out is being considered. Lawmakers are also considering reducing taxes on the wealthy.

It is not known how far either side has compromised in reaching an agreement, although at one point Republicans also raised the issue of offering just $500bn instead of the proposed $700bn.

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