The plan proposes using Federal Reserve loans and private capital to leverage up the remaining $250bn in the troubled asset relief programme to create up to $2,000bn in buying power.

The administration will create a Public Private Investment Fund to buy $500bn to $1,000bn of toxic assets at prices established by private co-investors. Meanwhile, the Federal Reserve is to provide up to $1,000bn in financing for securitised credit markets. The Treasury will set aside another $80bn in risk capital to absorb losses on the Fed loans, and spend $50bn on anti-foreclosure programmes.

The Treasury said any bank receiving injections would be prevented from paying dividends of more than 1 cent per quarter, repurchasing shares and making cash acquisitions of healthy companies without approval.

Congress must now reconcile the Senate bill with the $819bn House of Representatives version passed last month before sending final legislation to the White House.