The fate of President Bush’s $700 billion economic bailout plan hung in the balance today as the US Congress prepared for a climatic vote amid assurances from both Democratic and Republican leaders that the bill will pass.

US stocks rose sharply in early trading as optimism surrounding the vote and a bank takeover eclipsed bleak US jobs data. The Dow Jones industrial average gained around 250 points after news that Wells Fargo, one of the strongest US banks, had agreed a $15 billion buyout of Wachovia Corporation.

Nevertheless, figures showing that American employers slashed 159,000 jobs last month have placed severe pressure on the House of Representatives to pass the $700 billion rescue package for banks and other financial firms. Lawmakers are currently debating the legislation, with a vote expected in the afternoon.

September's job losses were much more severe than predicted by Wall Street economists surveyed by Reuters, who had forecast 100,000 jobs would be cut. The unemployment rate remained at 6.1 percent, the highest in five years.

Early this week, the House delivered a shocking defeat to the Bush Administration's bailout plan and sent the Dow Jones industrial average plummeting by 778 points, or about 7 per cent. On Wednesday an amended version, containing $150 billion in tax breaks, was resoundingly passed by the Senate, spurring hopes that Congress would follow suit.

Nancy Pelosi, the Speaker of the House, said she was confident that after a day of behind-the-scenes haggling the Bill would be passed by the House.

"This is only the beginning," Mrs Pelosi said, vowing Congress would be holding hearings into how Wall Street led the world's largest economy to the brink of disaster.

John Boehner, the House Republican leader, said that the Bill was not “perfect” but “clearly better than a week ago.”

"I'm optimistic about today,” he said. “We're not going to take anything for granted. We're going to continue to talk to our members, but it's time to act.”

The White House also piled in, releasing a statement saying that the package would “send an important, helpful signal to markets here and abroad that the federal government will take the actions necessary to get our financial system back on track.”

Around the world, calls came for the US House to pass the legislation, which would allow the Treasury to buy toxic debt from US banks, a move that many say is needed to head off the worst financial crisis since the Great Depression.

Francois Fillon, the French Prime Minister, said the world stood on the "edge of the abyss."

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