NEW YORK/WASHINGTON; The US House of Representatives approved a $700 billion bailout package for US banks, under pressure from all sides as the effort to head off a spreading financial crisis hung in the balance.

The House approved the financial rescue plan by a vote of 263-171, sending the measure to US President George W. Bush and concluding two weeks of legislative haggling in Congress that had roiled and captivated global markets.

President Bush yesterday hailed congressional passage of the package, vowing to sign it quickly and calling it vital to rescuing the battered US economy. Warning “it will take some time” for the measure to have an effect, Bush promised in hastily announced remarks in the White House Rose Garden that “when Congress sends me the final bill, I’m going to sign it into law.”

Federal Reserve Chairman Ben Bernanke said: “I applaud the action taken by the Congress. It demonstrates the government’s commitment to do what it takes to support and strengthen our economy. The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses.”

Bernanke said the Fed “will continue to work closely with the Treasury as it undertakes these new initiatives” and would “continue to use all of the powers at our disposal to mitigate credit market disruptions and to foster a strong, vibrant economy.”

Wells Fargo & Co. stepped in to buy Wachovia Corp., a bank badly hobbled by the credit crisis, providing a rare bit of positive news for the financial sector and sending markets higher.

In new signs of spreading crisis, California said it was running out of money, France said the world stood on the “edge of the abyss” and European leaders were divided over their own response to the global crisis. The House had shocked the world on Monday by rejecting the first draft. With elections on Nov. 4, lawmakers from both parties were wary of voter backlash in asking taxpayers to pay for Wall Street’s mistakes.

Yesterday, speaker after speaker from both parties said rejecting the bailout could have devastating consequences for an already slowing US economy, arguing the bill was as important for small businesses, homeowners, students and pensioners as it was for the financial sector.

“While the focus has been on the Dow Jones and Wall Street, we are addressing the real pain felt by Mr. and Mrs. Jones on Main Street,” said House Speaker Nancy Pelosi, a California Democrat.

House Republican leader John Boehner said: “We have to act, and if we do not this crisis is likely to worsen and put us into an economic slump like many of us have never seen.”

The bill would allow the US Treasury to buy toxic debt from US banks, which many economists said is needed to head off the worst financial crisis since the Great Depression. US stocks rose on hopes for the bailout plan and the deal to buy Wachovia. The dollar continued to rally against the euro and European stocks rose about 3 percent.

In California, Gov. Arnold Schwarzenegger warned the US Treasury the state may need short-term federal loans because it can’t raise money.

A collapse in the US housing market and resulting bad mortgages have shattered confidence in the financial sector, with banks across the United States and Europe needing support from governments or outside investors this week.

Interbank lending and credit to businesses and private individuals has all but seized up. Central banks have injected billions of dollars to maintain some flow of funds.