Treasury Secretary Paul O'Neill is sending a letter to Congress warning that extraordinary measures will be needed to prevent a federal debt default during the Congressional recess if the legislature does not act.

The US Treasury Department is considering asking Congress to raise the debt ceiling, the amount of money the government can borrow in its budget submission for fiscal year 2003, in February, North Dakota Democratic Senator Kent Conrad told reporters.

Some £4m has been blocked and 50 bank accounts frozen as countries worldwide join the US effort to stop the flow of money to terrorist networks, US President George Bush has said.

A top Chinese official has said he believes his country and the United States have resolved their dispute over the downed US spy plane, and agreed to hold China’s highest level meeting with the Bush administration since the crisis began.