The world is “watching and waiting for America to lead once more”, Barack Obama proclaimed yesterday as he set out the case for an economic policy that heralds a return of big-spending government intervention.

In his first major speech since winning the election two months ago, he warned that if Congress resisted or delayed approving a stimulus package designed to counter the worst effects of the recession, “a bad situation could become dramatically worse”.

He added: “For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

The American Recovery and Reinvestment Plan is likely to cost more than $700 billion (£461 billion) on top of a federal deficit already projected to hit a record $1.2 trillion this year.

Republicans, while promising to work with the President-elect, are deeply uneasy about pouring billions into public works programmes that resemble the “big government” solutions they have spent their careers fighting. John Boehner, the House of Representatives minority leader, yesterday asked: “At the end of the day, how much debt are we going to pile on future generations?”

Such criticism reflects the concerns of free market conservatives across the world, including the Tory leadership, who baulk at the cost of programmes to counter the recession.

Mr Obama appears to be putting himself alongside Gordon Brown as a politician who regards government as a solution rather than a problem.

He said: “At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy where a lack of spending leads to lost jobs which leads to even less spending, where an inability to lend and borrow stops growth and leads to even less credit.”

Mr Obama hopes to sugar the pill for fiscal conservatives by promising to cut back on wasteful spending programmes, even holding out the prospect of long-term reform of the pension, Medicare and Medicaid entitlements that drain so much federal cash each year. He has also risked hostility from Democrats on Capitol Hill by promising tax cuts worth hundreds of billions to workers and businesses.

In his speech at George Mason University just outside Washington, Mr Obama made another explicit pitch for bipartisan support, saying: “We won't just throw money at our problems - we'll invest in what works. The true test of the policies we'll pursue won't be whether they're Democratic or Republican ideas, whether they are conservative or liberal ideas, but whether they create jobs, grow our economy, and put the American Dream within reach of the American people.”

He asked Congress to work with him “day and night, on weekends if necessary” to pass a revival plan within the next few weeks so that it can be ready for his signature shortly after he takes office on January 20.

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