US Senate Democrats and Republicans have agreed to vote Thursday morning, Australian time, on a $US700 billion ($885 billion) financial-rescue plan, amid evidence that voters and lawmakers are regreting the US House rejection of the bailout.

"This is an important accomplishment and a way forward,'' Republican Leader Mitch McConnell said.

The final version of rescue package is still being drafted. Under the accord, announced on the Senate floor, McConnell and Majority Leader Harry Reid have to agree on the language of the legislation before a vote can take place.

Senators plan to include a provision that would raise the limit on federal insurance for bank deposits to $US250,000 from $US100,000 now, a move demanded by some of the rescue plan's critics.

President George Bush and Senate leaders vowed to revive the legislation after the House voted down the package on a 228-205 vote, with 40% of Democrats and two-thirds of Republicans against it.

The package would give the Treasury Department broad power to buy troubled assets, chiefly mortgage-backed securities, that are saddling investors and financial institutions.

McConnell said on Tuesday that a plunge in US stocks after the House vote showed the urgent need for Congress to act.

"The message from the markets (on Monday) was clear,'' McConnell said.

Sweetened package

The House vote, a rebuke to Bush and leaders of both parties in Congress, triggered angry recriminations and the biggest one-day point drop in the history of the Dow Jones Industrial Average.

Stocks rose today, suggesting investor optimism that Congress would revive the rescue package. The Dow rose 485 points, or 4.7%, to 10,850.66, in New York.

Voters flooded Capitol Hill offices, decrying the defeat of the rescue package, a House Republican leadership aide said. Prior to yesterday's tally, lawmakers said sentiment was running about 100-1 against the plan.

Bush promised today that the House vote wouldn't be the final word. "I realise this is a difficult vote for members of Congress,'' he said today. "But the reality is that we're in an urgent situation and the consequences will grow worse every day.''

'No. 1 goal'

Reid, a Nevada Democrat, agreed. "This continues to be our No. 1 goal,'' he said.

To sweeten the package for opponents, the bill would give authority to the Federal Deposit Insurance Corp. to raise the size of bank accounts the agency guarantees.

FDIC Chairman Sheila Bair today asked for temporary authority to raise the insurance limits.

The move was endorsed by Republican presidential nominee John McCain and Democratic opponent Barack Obama. Both Obama and McCain plan to return to Washington for tomorrow's vote, their aides said.

Reid said he is in contact with White House Chief of Staff Josh Bolten. Also, Reid said Obama informed him he talked to Bush about the plan.

"We're working together to try to resolve this important issue,'' Reid said.

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said some House members who voted down the plan are now having "second thoughts'' and "want another shot at this.''

There were no votes scheduled on Tuesday in the House or Senate in observance of the Jewish New Year Rosh Hashanah.

Bloomberg News