Washington - Democratic and Republican leaders of the House of Representatives traded accusations over the failure of a massive rescue plan for the US financial industry, but promised to go back to the drawing table to find a workable compromise.

"We delivered on our side of the bargain," said Democratic House Speaker Nancy Pelosi, pointing out that 60 per cent of majority Democrats voted for a bill proposed by Republican President George W Bush.

The House Republican leadership blamed a partisan speech by Pelosi shortly before the final vote, which held the Bush administration responsible for the current crisis. Republicans claimed it turned off a dozen of their members who had been prepared to vote in favour.

The House voted 228-205 against the bill. Republicans led the opposition, voting 2-1 against the 700-billion-dollar bail-out plan. The Dow Jones Industrial Average plunged 700 points by Monday afternoon.

The rejection came despite congressional leaders of both parties supporting the rescue measure, which was hammered out during nine days of tough negotiations. It was unclear when or how another compromise would be worked out.

"The legislation has failed, the crisis has not gone away, we must work in a bipartisan way in order to have another bite at the apple," Pelosi said.

Congressional leaders and White House officials thought they had forged an agreement Sunday but lower-level legislators in both parties derailed the process, resenting the need to put taxpayer money on the line to bail out greedy Wall Street investors.

Barney Frank, head of the Financial Services Committee, said he was "appalled" that Republicans would seek to place the blame on Pelosi for one partisan speech.

"There's a terrible crisis affecting the American economy, and because somebody hurt their feelings they decided to punish the country?" Frank said.

John Boehner, the minority leader, promised to go back and find a compromise in the coming days.

"We need everybody to calm down and relax and get back to work," Boehner said.