Several thousand people protested in Buenos Aires on Wednesday against the proposal [AFP]

The law was approved early on Friday by 160 to 75 votes after a 14-hour session.

When the bill was announced in October, it was labelled by its critics as an attempt by Cristina Kirchner, the president, to sequester funds to help cover the government's $20bn interest and principle debt payments for 2009.

Argentinian stock markets dropped after the legislative proposal which stoked fears of the country's inability to pay its arrears.

Kirchner asserted at the time of the announcement that the move was being made to protect retirees from the effects of the global financial crisis.

She again said on Thursday that "there was a [private] system that spectacularly collapsed. This was a policy of looting".

"It is evident that when nobody regulates the market, nobody controls it and it is allowed to do what it wants, we wind up with a financial disaster like the one the global economy faces," Kirchner said.

The bill will now continue to the senate, where her Peronist party holds a more marginal majority then they have in the lower house. It may be voted on as soon as November 20.

Assets arrogated

Assets from 10 Argentinian private pensions funds will be arrogated, adding more than $4bn annually to to the government.

Argentina economy, the third largest in Latin America, has had increased state involvement since Kirchner's predecessor, her husband Nestor Kirchner, took power in 2003.

During his tenure the postal service, water works company and rail lines, among other things, were nationalised.

Several thousand people marched outside congress on Wednesday to protest against the latest nationalisation proposal.

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