Smash hit

"There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done," said Mr Bush.

"My administration continues to work with the Congress on a rescue plan. And we need a rescue plan. This is hard work. Our proposal is a big proposal. And the reason it's big and substantial is because we got a big problem."

White House press secretary Dana Perino said President Bush had been in close consultation with congressional leaders, and predicted that a final deal was possible by "the opening bell on Monday."

Speaking from his airplane on the way to the Mississippi debate, Barack Obama said he was also encouraged by the negotiations and “optimistic” at the prospects for a deal. “I think that there is real progress being made this morning and last night,” Mr. Obama said. “I think it’s important that the markets seem to be staying relatively calm at this point.”

A short time later, the Senate majority leader, Harry Reid of Nevada, assured Americans: “We’re going to get this done and stay in session as long as it takes to get it done.”

Talks reopened today after a week of high political drama in Washington in which Congressional leaders first heralded an outline agreement, but then became embroiled in a tempestuous row at the White House when they met with Mr Bush and the two presidential candidates, Barack Obama and John McCain.

Treasury Secretary Henry Paulson later reportedly knelt before the Democratic House of Representatives Speaker, Nancy Pelosi, as he appealed for her support. She replied: “It’s not me blowing this up, it’s the Republicans.”

Mr Obama is understood to have pressed him hard on this idea and Mr Paulson dismissed it swiftly as unworkable. Mr McCain, who is being accused of destabilising negotiations by injecting presidential politics into them, is said to have remained largely silent.

Some senior Democratic figures suspect opposition is being choreographed so that John McCain can be seen to deliver an eleventh-hour solution today. Others fear that with fewer than a hundred House Republicans prepared to vote for the measure, it is the Democrats who may be left carrying the can for a deeply unpopular and high-risk deal.

Mr Bush said today: "Now, any time you have a plan this big that is moving this quickly, that requires legislative approval, it creates challenges. Members want to be heard. They want to be able to express their opinions, and they should be allowed to express their opinions.

"The legislative process is sometimes not very pretty, but we are going to get a package passed. We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan."

At the White House meeting, the president is said to have used more prosaic language: "If money isn't loosened up, this sucker could go down."

Richard Shelby, the senior Republican on the Senate Banking Committee, was first to emerge from the White House summit to announce "the agreement is obviously no agreement".

Last night Mr Paulson and Federal Reserve Chairman Ben Bernanke raced back to Capitol Hill to revive the proposal, which could cost as much as $700 billion. Negotiations ceased around 10pm and are due to resume this morning.

The proposal would allow banks to dump toxic assets into a federal fund controlled by the US Treasury. British banks that have significant operations in the US would also be able to take part.

Under the accord announced earlier yesterday, Mr Paulson would have been given $250 billion immediately and could have an additional $100 billion if he certified it was needed, an approach designed to give Congress a stronger hand in controlling the rescue scheme's spending.

The Bush administration has made a number of concessions on demands to limit pay for executives of bailed-out financial institutions and give the government an equity stake in rescued companies.

Chris Dodd, the chairman of the Senate Banking Committee, suggested that the injection of presidential campaign politics had caused negotiations to be distracted for "two or three hours by political theatre” and that it had begun to resemble “a rescue plan for John McCain”.

Times Recommends

• Times Charity Appeal: SolarAid
• Is it Black Monday all over again for Dubai?
• Behind the scenes at the biggest deal