U.S. lawmakers at the Congress reached a tentative deal Sunday on a US$700-billion bailout plan designed to buy up bad loans from financial institutions hit by failed mortgages.

House of Representatives Speaker Nancy Pelosi said the lawmakers had made "great progress" on the bill. "We have to get it committed to paper so we can formally agree," she said. A formal announcement of the deal is expected late Sunday.

"We've been working very hard on this," U.S. Treasury Secretary Henry Paulson told reporters on early Sunday morning.

"We've made great progress toward a deal, which will work and will be effective in the marketplace, and... effective for all Americans," he said.

Paulson presented the original bailout plan more than a week ago, which foresees use of tax dollars to buy up bad debt from financial institutions staggered by the sub-prime mortgage crisis.

However, the plan was rejected by some Republicans who wanted an alternative plan under which the government would provide insurance to companies that agree to hold frozen assets. The alternative plan would cost taxpayers less, the Republicans said.

Media reports said the House and the Senate could vote on the bill on Sunday and Monday respectively.