McCain has been accused of bringing presidential race politics into the financial crisis debate [AFP]

Speaking outside the Oval Office at the White House in Washington on Friday, Bush said: There is no disagreement that something substantial must be done. We are going to get a package passed."

The president's statement came a day after an apparent agreement on the broad outline of a relief bill fell apart.

A deal on the government's proposal had earlier seemed within reach, according to both Republican and Democratic legislators.

However, it later stalled after a White House meeting between Bush, Barack Obama and John McCain, the two US presidential candidates, and congressional leaders.

The government's plan, proposed by Henry Paulson, the US treasury secretary, had been under discussion in congress where legislators have called for changes.

US Republicans proposed an alternative bail-out plan, but the move was criticised for stalling government efforts to stay the country's economic meltdown.

Republican proposal

Talks on the government's bail-out plan, which aims to use taxpayers' money to buy up bad debt held by US financial institutions, are due to start again on Friday.

Bush appears to be open to Democratic demands to broaden the package to hard-pressed mortgage holders.

A compromise that would give legislators oversight of the deal's implementation, and US taxpayers an equity stake in a bailed-out company, as well as cap the pay of executives of rescued firms had seemed in the works until the White House meeting.

Inside the White House session on Thursday, John Boehner, the House Republican leader, announced his concerns about the emerging plan and asked that the Republican alternative be considered, aides said.

At an impromptu news conference, Barney Frank, the Democratic chairman of the House of Representatives financial services committee, brandished a single sheet of paper that he said was the sum of new Republican proposals introduced at the last minute after a week of sleepless nights in congress.

Sceptical public

Reflecting the unease of many Republicans at the government's unprecedented intrusion into private enterprise, the new plan calls for an independent entity to dispose of bad assets, and a cut in capital gains tax.

Few Americans support the government's proposed bail-out.

James Berard, a voter in New York, said: "They should let the companies and the executives suffer, I myself have lost $150,000 from my retirement accounts."

McCain has come under fire for bringing presidential race politics into the debate.

Christopher Dodd, the senate banking committee chairman, called the White House meeting, convened by Bush at McCain's request, a "photo op and political theatre that had nothing to do with us getting to work".

But McCain said legislators were on track for a deal and Steve Schmidt, one of his senior advisers, said it was Harry Reid, the Democratic senate majority leader, who had said McCain's help was needed to help gather Republican support for the plan.

Financial fallout

Asian stocks and the US dollar fell on Friday as the US bail-out plans stalled.

Banks around the world are seeking to ensure a flow of credit amid the financial turmoil.

The Bank of Japan pumped a total of 1.5 trillion yen ($14bn) into the Tokyo money market, according to data on its website, on Friday.

Meanwhile, new evidence of the sector's distress came late on Thursday as the US government shut down Washington Mutual, allowing JPMorgan Chase to buy the bank's operations for $1.9bn.

In Europe, Dutch-Belgium bank and insurer Fortis announced plans to sell additional assets to improve its solvency, in an attempt to reassure customers and investors.

HSBC, the largest European bank, announced it was cutting 1,100 jobs worldwide, "in the light of the current global business and economic environment".

Five hundred of those jobs were to be cut in Britain.

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