United States senators will vote on Wednesday on a revamped financial rescue package after the House of Representatives rejected an initial $US700 billion plan.
The plan, which would allow the Treasury to buy toxic mortgage-related assets from banks, has been the main hope for government action to unlock credit markets and head off a deeper economic downturn in the US and elsewhere.
Mr Bush said on Tuesday the situation was urgent and the consequences would grow worse each day if no action was taken.
"Our country is not facing a choice between government action and the smooth functioning of the free market. We're facing a choice between action and the real prospect of economic hardship for millions of Americans," he warned.
The Senate agreed to vote on the new version of the bailout package for Wall Street that will include a big increase in the amount of bank deposits protected by the government's insurance programme.
Senate Majority Leader Harry Reid received unanimous consent from the Senate to schedule the vote on the package, which the White House says is imperative to stem a credit crisis that has spread beyond Wall Street to claim more European banks.
The House of Representatives shocked markets by rejecting the package on Monday, prompting the worst sell-off on US markets in 21 years.
Markets bounce back
Socks roared back on Tuesday and the US dollar rallied as investors bet lawmakers would manage to salvage the package to stabilise the financial industry.
The Dow Jones index closed up 4.7% on Tuesday, recouping some losses from Monday's lowest ever fall to date. The Standard & Poor's 500 index shot up by more than 5% on Tuesday, the biggest one-day gain for that measure of the broad market in six years.
Markets in the Asia-Pacific region saw gains on Wednesday on the back of the Wall Street result.
The New Zealand benchmark index was up 97 points, or 3.1%, at the close. But brokers say confidence remains fragile and they expect the market will continue to be volatile, regardless of the outcome of the US rescue deal.
The Australian benchmark index was up 4.22%, while Japan's Nikkei finished 0.96% higher by the close of trade.
Shares rebounded in Britain and Europe on Tuesday as investors became more confident that the bailout plan could be revived. Britain's top share index the FTSE 100 ended 1.7% higher, while the FTSEurofirst 300 index of top European shares was up 1.6% at the close.
Pressure on House to pass bill
If the bailout package passes in the Senate, as expected, it will put more pressure on the House of Representatives to follow suit when it meets again on Thursday.
The Senate bill would increase to $US250,000 from $US100,000 the amount of individual deposits insured by the Federal Deposit Insurance Corp, seeking to shore up consumer and business confidence in banks.
It may also win over lawmakers trying to sell their constituents on an expensive plan funded by taxpayers and seen as benefiting wealthy financiers.
President Bush, Treasury Secretary Henry Paulson and the two candidates hoping to succeed Mr Bush as president, Republican Senator John McCain and Democratic Senator Barack Obama, reaffirmed their support for a bailout plan on Tuesday.
Global aftershocks
From Dublin to Moscow, the financial crisis is an ominous presence. Ireland unveiled a blanket guarantee for savings held by its banks, and for the second time in a month Russia briefly shut down its stock markets on Tuesday.
France, Belgium and Luxembourg poured 6.4 billion euros into Franco-Belgian bank Dexia to avoid defaults on its loans, and France promised new bank measures to help depositors.
Shares of British bank HBOS Plc fell on concerns Lloyds TSB Group Plc could renegotiate a deal to buy HBOS.
Dutch-Belgian banking and insurance group Fortis was partially nationalised and regional US bank Wachovia sold its banking operations to Citigroup.
The Wachovia deal is the latest in a series of events that has transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.
The changes include the government takeover of mortgage finance companies Fannie Mae and Freddie Mac, the bankruptcy of Lehman Brothers Holdings, the failure of giant savings and loan Washington Mutual, and Bank of America Corp's purchase of Merrill Lynch & Co.
