Washington - The Democrats who control the US Senate and minority Republicans have agreed to hold a vote late Wednesday on a new version of the 700-billion-dollar financial rescue plan that was defeated in the lower House of Representatives.

The details were still being hammered out late Tuesday in Washington, after the deal was announced on the Senate floor. Majority leader Harry Reid and Mitch McConnell, chief of the Senate Republicans, will both sign off the final version before Wednesday's expected vote.

"Senate Democrats and Republicans believe it is essential that we work quickly on this important legislation to restore confidence to our financial system and strengthen the economy," Reid said in a statement, voicing his hope for passage on Wednesday.

The defeat of the bill on Monday in the House in a 228-205 vote was followed by a huge drop on Wall Street and stock markets worldwide.

The proposal for the federal government to buy up soured mortgage- backed securities and other "toxic" investments, as a mechanism to restart shattered credit markets vital to the US and global economies, was first put forward two weeks ago by US Treasury Secretary Henry Paulson.

Among the revisions being added to the Senate legislation were an increase in government-backed guarantees for bank deposits from 100,000 dollars to 250,000 dollars.

Monday's failure in the House, with two thirds of Republicans and two fifths of Democrats voting no, was a humiliation for the congressional leadership of both parties. The vote was also a repudiation of Paulson and his boss, President George W Bush, whose approval ratings with less than four months left in office are below 30 per cent, the lowest for a sitting president in more than 30 years.

Despite the defeat, the White House began pushing Tuesday for another attempt at passage this week. Bush again warned of the "urgent" need for Congress to act.

"The president intends to stay here to work on this financial rescue package with members of Congress for as long as it takes to get this done," White House spokesman Tony Fratto said.

Presidential candidates John McCain and Barack Obama, both members of the US Senate, joined the chorus for reconsideration of the proposal.

The bill had proven wildly unpopular with the public, and so many people had contacted their representatives about the proposal that steps had to be taken to restrict email to Congress to prevent servers from crashing, according to The Hill, a newspaper that covers Congress.

A Washington Post-ABC News poll showed that most Americans believe there is a financial crisis, with about 90 per cent concerned that Monday's failure of the bill could prompt further decline. Still, just 45 per cent of 520 people surveyed supported the House version.

After Monday's drop of nearly 7 per cent in the Dow Jones Industrial Average, Wall Street rebounded Tuesday on renewed hopes for a deal, with the blue-chip index regaining 4.7 per cent.

Bush noted that US shareholders lost 1 trillion dollars in Monday's decline and warned of the impact on tens of millions of people's retirement accounts and personal savings. He said that if the country "continues on this course," the harm will be permanent.

Bush said that the plan did not represent a choice between government intervention and the free market.

"Our country is now facing a choice between action and the real prospect of economic hardship for millions of Americans," Bush said. "For the financial security of every American, Congress must act."

As the uncertainty on US markets spilled over internationally, French President Nicolas Sarkozy called for an emergency summit of world leaders to address the crisis, while the European Commission is on the eve of unveiling its own plans to improve the regulation of the financial sector.

The European Commission on Tuesday urged United States lawmakers to uphold their responsibilities and swiftly approve a massive rescue plan amid global financial turmoil.

"The turmoil that we are facing has originated in the US, and has become a global problem," said commission spokesman Johannes Laitenberger.