Mr Geithner said the plan would be better for taxpayers

The US has announced details of a plan to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks’ balance sheets.

The "Public-Private Investment Programme" will purchase the troubled mortgages and securities that have been at the root of the credit crisis.

The Treasury has committed $75bn to $100bn to the programme and said the private sector would also contribute.

Investors welcomed the news, with stocks rising in Europe and Asia.

The Treasury said the plan would help the financial system recover.

"This approach is superior to the alternatives of either hoping for banks to gradually work these assets off their books or of the government purchasing the assets directly," the Treasury said.