A EUR700bn (pounds 380bn) rescue package for the United States' troubled economy was in tatters last night after it was rejected by the lower house of the US Congress.

The Dow Jones industrial average plunged more than 700 points as the US House of Representatives voted against the Bill, which President George Bush described as necessary to avoid a long and painful recession in the USA.

A White House spokesman said Mr Bush was "very disappointed".

"There's no question that the country is facing a difficult crisis that needs tobe addressed," deputy press secretary Tony Fratto said.

The Bill was rejected 228-205, with 133 Republican politicians and 95 Democrats refusing to back the rescue package.

Early yesterday, Mr Bush repeated his assertion that the Bill would present a "difficult vote "for members of the US Congress, but urged them to pass the "bold" measure.

But when the critical vote was tallied, too few members of the House - who face elections on November 4 - were willing to support the unpopular measure.

House Democrats and Republicans all said they hoped to continue negotiations and bring another economic Bill to the floor for a vote later this week.

House Republicans blamed a partisan speech by Speaker Nancy Pelosi, a Democrat, for the Bill's failure.

John Boehner, the Republican minority leader, said: "Americans are angry, and so are my colleagues. They don't want to have to vote for a Bill like this. And I understand that.

"But I have concerns about what this means for the American people, what it means for our economy and what it means for people's jobs."

The rejection by the House of Representatives followed another horrific day in the UK which saw the global credit crisis claim its latest victim as the Government seized control of ailing mortgage lender Bradford & Bingley.

More than pounds 64bn was wiped off the value of blue chip stocks on the Footsie and the latest Bank of England figures revealed that mortgage lending plummeted by 95%during August.

Full report: pages 6&7

(c) 2008 Western Mail. Provided by ProQuest LLC. All rights Reserved.