Mr Obama, who has described the package as one part of a plan to solve his country's economic ills, was expected to lay out a strategy on Wednesday to stem home foreclosures and address the housing crisis that sparked the financial sector meltdown.

Mr Obama, speaking in Denver where he visited a solar power installation, has staked his political reputation on the package, a mixture of tax cuts and spending projects, saying its success will determine his success as president.

He sounded a cautious but confident note in his remarks before signing the bill.

'I don't want to pretend that today marks the end of our economic problems, nor does it constitute all of what we're going to have to do to turn our economy around,' he said.

'But today does mark the beginning of the end.' The White House has said it will take about a month for the money to start flowing. Some economists, however, believe the measures will come too late to have an effect in 2009, when many forecasters predict full-year output will contract.

Some US states are reeling with their own budget problems.

Lawmakers in California, the nation's most populous state, failed to pass a US$40 billion budget on Sunday, giving weight to Governor Arnold Schwarzenegger's threat to lay off up to 20,000 state employees. Kansas is also running out of cash and its governor said it might halt tax refunds.

Less tax and more spending
The stimulus package includes working class tax cuts, infrastructure spending, help for the poor and unemployed and investment in alternative energy.

Mr Obama has predicted that it will save or create more than 3.5 million jobs over the next two years.

Though a major success for his young presidency, the stimulus debate in Congress laid bare bitter divisions over how to boost an economy suffering a rising jobless rate of 7.6 per cent and a banking crisis that has nearly frozen lending.

Only three Republicans voted for the measure in the 100-seat Senate, and no Republicans broke ranks to support it the House, arguing it had too much spending and not enough tax breaks. The final plan was split into 36 percent for tax cuts and 64 percent in spending and other provisions.

Republicans lambasted the package on Tuesday for being too expensive and criticised Democrats for pushing it through.

US stocks slid on Tuesday, sending Wall Street near bear-market lows. Other global markets also sank on fears that government action will not be enough to pull the United States out of recession and avert a deepening worldwide financial crisis.

The White House has repeatedly dismissed one-day market reactions to its proposals. -- REUTERS