President George W. Bush signed the biggest government intervention in the financial markets since the Great Depression after U.S. House of Representatives lawmakers wary of growing signs of the nation's economic distress voted Friday in favor of a $700 billion Wall Street rescue package.

The 263-171 vote was a reversal from Monday, when House lawmakers shocked investors and their own leaders by voting against a more narrow version of the plan to buy up distressed assets from financial institutions. That vote sent financial markets tumbling and forced the Bush administration and congressional leadership to scramble and salvage the rescue plan.

The Bush administration's $700bn (£380bn) bail-out for the banking industry finally won legislative approval today after a week of persuasion, negotiation and horse-trading prompted Congress to reverse its opposition to the plan.

In a resolution which sent Wall Street shares soaring, the House of Representatives comfortably backed the plan by 263 to 171. The vote overturned Monday's shock result in which congressmen and women opposed the plan by 228 to 205.

Mr. Bush welcomed the passage of a rescue plan, saying it will help the nation's economy withstand the financial turmoil. The legislation is "essential to helping America's economy weather the financial crisis," said the president, giving a brief statement outside the White House.

Mr. Bush acknowledged widespread concern about using taxpayer money to bail out wealthy bankers, but said the ultimate cost will be "far less" than the initial government outlay, since the plan is to sell the toxic assets back into the market once it recovers.

But he warned that "Americans should also expect that it will take some time for this legislation to have its full impact on our economy."

On the floor of the New York Stock Exchange, traders gathered around television monitors to watch the vote and there were cheers when it became clear that the bill had been passed. The Dow Jones industrial average rose by 188 points to 10,671. But within a quarter of an hour it had given up almost all of its gains.

Having been accused of inflaming opposition in the first vote through an aggressive speech attacking the Bush administration, the Democratic speaker of the House, Nancy Pelosi, issued a resounding appeal for a "yes" vote today.

"The urgency is clear," she said, referring to dismal economic conditions. "We hear it from our friends, from our neighbours. We hear it every place we turn."