Mr Obama, who will be sworn in as president on Tuesday, said that Mr Geithner, 47 was lauded across the political spectrum and by market experts when he was nominated, and was needed to help pull America out of the economic crisis.

'Is this an embarrassment for him? Yes, he said so himself,' Mr Obama told reporters. 'But it was an innocent mistake ... it has been corrected, he paid penalties.'

'If my criteria, whether it was for Cabinet secretary or vice presidents or presidents or reporters was that you'd never made a mistake in your life, none of us would be employed.

'So my expectation is that Tim Geithner will be confirmed.'

A Senate hearing on Geithner's nomination was earlier postponed until after Obama's inauguration.

The Senate Finance Committee had scheduled a hearing for Friday but Republican objections mean it will not now be held until January 21, the day after the inauguration, a congressional aide said.

The move means that Mr Obama will not have a Treasury secretary in place as soon as he takes office on Tuesday in the depths of the worst economic crisis since the 1930s.

Mr Geithner has admitted to not paying taxes on time when he was self-employed but has since settled the debt with interest and said a former housekeeper he retained had an expired visa.

Democratic leaders and Obama aides on Tuesday mounted a staunch defense of Mr Geithner in a bid to save his nomination after the revelations emerged, and the Treasury secretary designate met members of the Senate Finance Committee.

Senior Democratic senator Chuck Schumer told reporters on Wednesday that the did not believe the Geithner nomination was in trouble.

'I am very optimistic that the nomination will go forward,' Mr Schumer said, adding he had heard from members on both sides of the aisle that Mr Geithner's transgression would not derail his nomination.

On the face of it, the transgressions seem minor but key nominees of both presidents George W. Bush and Bill Clinton foundered over controversies over immigration papers and tax obligations relating to domestic help.

Mr Obama believes Mr Geithner will bring international experience, the insight of a Washington insider and market know-how to the key post at a time of acute, global economic peril.

The well-traveled president of the New York Federal Reserve has been at the sharp end of US authorities' battle to shore up panicky financial markets by overseeing the central bank's explosion of intervention in recent months.

Before Tuesday's revelations, Mr Geithner had been expected to cruise to Senate confirmation. -- AFP