President Obama will reveal a plan today to stem the flood of home repossessions afflicting millions of American families after signing his $787 billion economic stimulus package into law last night.

Amid persistent concerns among investors about the Obama Administration’s ability to turn around the US economy the global markets fell again. At close of trading the Dow Jones index had dropped almost 300 points, nearing its lowest level for a decade.

The Bill – the biggest government intervention in the US economy since the 1930s New Deal – was passed by Congress in only three weeks, although with almost unanimous Republican opposition. A spokesman for Mr Obama, when pressed, did not rule out a second stimulus Bill.

Yesterday’s plan is the centrepiece of Mr Obama’s domestic legislative agenda aimed at boosting job creation and reviving the stricken US economy. It will be an important factor in determining the fate of his presidency.

Mr Obama has pledged repeatedly that the package will create or save 3.5 million jobs within two years. The White House even released job targets for each of the 435 US congressional districts. It is a list that could come back to haunt the President if his pledges are not realised by the mid-term elections in November 2010.

Invoking Winston Churchill, Mr Obama said that the Bill would not end the economic problems of the US – “but today marks the beginning of the end”. The plan, he said, represented the “first steps to set our economy on a firmer foundation, paving the way to long-term growth and prosperity”. He added: “None of this will be easy.”

The Bill will pump money into infrastructure projects, healthcare, education, food assistance for the poor and renewable energy development. Before the signing ceremony last night Mr Obama visited a solar panel installation project to emphasise how the package would create green energy-related jobs.

After signing the Bill in Denver – part of a concerted White House strategy to get Mr Obama out of Washington to sell his economic agenda directly to the American people – the President headed to Phoenix where he will address the soaring number of mortgage defaults. Arizona has one of the highest home repossession rates in the country.

The housing crisis is at the heart of the US recession – much of the debt crippling the banking sector is mortgage-related. Last year 2.3 million homes were repossessed across America – an 81 per cent increase on 2007. Another three million are threatened in 2009, meaning that without a drastic rescue about eight million more Americans will lose their homes. By the end of 2008 more than 9 per cent of US mortgages were delinquent or in the process of being repossessed.

Mr Obama will announce a plan that will cost between $50 billion (£35 billion) and $100 billion to address the crisis, with the funds coming from part of the second half of the $700 billion Wall Street rescue package passed by Congress in October. That is entirely separate from the $787 billion stimulus Bill signed yesterday, which in turn is not part of the roughly $1 trillion of government money that the Administration says will be needed to help to stabilise the financial sector. The national budget deficit is already predicted to reach $1.6 trillion this year.

Under the housing plan, Mr Obama is expected to outline two main elements: using government money to reduce loans, and increasing pressure on lenders to renegotiate mortgages and bring down monthly payments.

The plan faces many additional hurdles. Choosing which home-owners to help will be complex and controversial. Tens of millions of American who struggled to meet payments will inevitably resent seeing a neighbour effectively bailed out after taking on an irresponsible loan.

Housing downturn

81% rise in foreclosures last year

404,000 foreclosures in 2007

2.3 million US homes repossessed last year

1 in 54 households received at least one filing notice (legal eviction order)

523,624 foreclosures in California last year

225% more filings in 2008 than in 2006, before the housing market collapsed

23% drop in house prices across the US since their peak in mid2006

Source: Times database

Times Recommends

• Should Knox’s trial even have reached the courtroom?
• 'Was it real?' The US bailout nightmare
• Iranian opposition plays the long game