President Bush raised the stakes further yesterday in a game of brinkmanship with Capitol Hill and the candidates vying to succeed him, warning Congress that any delay for the $700 billion rescue for stricken financial institutions would send America’s cliff-edge economy tumbling.

“The whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector and retirement accounts,” he said. “Failure to act would have broad consequences far beyond Wall Street. It would threaten small business owners and homeowners on Main Street.” Henry Paulson, the US Treasury Secretary, and Ben Bernanke, Chairman of the Federal Reserve, are leading an intense round of negotiations with Congress to agree the bailout package within the week.

Democrats are pressing for the Bill to include help for struggling homeowners and a cap on executive pay.

Many say that they will not allow Mr Bush to use this crisis to speed through legislation as he did with the Patriot Act and a resolution authorising war in Iraq after the 9/11 attacks.

“They can’t get away with what they did in 2001,” said Senator Patrick Leahy.Conservative Republicans have also voiced unease about the scale of such “corporate welfare”, the Treasury’s “nationalisation” of financial markets and a perceived lack of consultation from the White House.

Mr Paulson indicated that he would be willing to compromise on both aid given to homeowners and greater oversight. Yet he remains opposed to any curbs on executive pay because he fears that banks will be reluctant to participate in the plan if such a measure is included.

Doubts have been raised not only by Democrats and Republicans on Capitol Hill but also from Barack Obama and John McCain, who recognise that the financial crisis will have profound consequences for their White House race. For the moment, both are broadly backing the intervention while insisting that their costly tax and spending plans would be unaffected by the turmoil on Wall Street.

They have, however, expressed strong reservations about details of a deal that risks infuriating US voters who have long since been struggling – unaided – with economic blight.

At a rally in Pennsylvania Mr McCain said that he was deeply uncomfortable that “so much power and money had been concentrated in the hands of one person” – a reference to Mr Paulson, who devised the bailout scheme – adding: “When we are talking about a trillion dollars of taxpayer money, ‘Trust me’ just isn’t good enough.”

Yesterday he suggested that Mr Paulson “may not be in the Treasury job” if he wins the election. Mr McCain’s aides even hinted that he may vote against the plan unless measures are agreed for more stringent oversight on how the money is spent.

For his part, Mr Obama has spoken highly of Mr Paulson and said that he would want him to help in the “transition process” between administrations. But in a speech in Wisconsin yesterday he restated his own conditional opposition to the proposal. “We cannot give a blank cheque to Washington with no oversight and accountability when no oversight and accountability is what got us into this mess in the first place,” he said. “We need a plan that helps families stay in their homes and workers keep their jobs; a plan that gives hardworking Americans relief instead of using taxpayer dollars to reward CEOs on Wall Street.”

Stuart Rothenberg, a political analyst, said that the Democratic nominee had to tread a particularly fine line when it came to the bailout. “Obama has been attacked for months – first by Hillary Clinton and now by McCain – for being indecisive. The best thing to do in this situation is to take a wait-and-see approach – but that’s a problem for Obama.

“He can’t be seen as opposed to something that is meant to protect people who have mortgages and bank accounts. But he risks being accused of bailing out the fat cats.”

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