WASHINGTON - Former US congressman Jesse Jackson Jr, the son of the well-known civil rights leader, pleaded guilty on Wednesday to stealing US$750,000 (S$929,834) in campaign donations to fund a lavish lifestyle.

The admission capped a stunning fall from grace for the Illinois Democrat who was once a rising national star but resigned under a cloud in November after 17 years in the House of Representatives.

"Today's guilty plea is nothing short of tragic," US Attorney Ronald Machen said.

"Jesse Jackson, Jr. entered public life with unlimited potential, but squandered his bright future by engaging in a self-destructive course of conduct that was staggering in both degree and scope."

Prosecutors said Jackson used campaign donations to pay for around 3,100 "personal expenses" ranging from groceries, dry cleaning and movie tickets to children's furniture, home renovations, fur capes, lavish vacations, a $43,350 gold-plated Rolex watch and memorabilia that included one of pop icon Michael Jackson's guitars.

"For seven years, Mr. Jackson (Jr) betrayed the very people he inspired by stealing their campaign donations to finance his extravagant lifestyle," Machen said in a statement.

"His fall from grace will hopefully chasten other leaders who are tempted to sacrifice their ideals and integrity to line their own pockets."

Jackson, 47, faces up to five years in prison on charges of conspiracy, making false statements, and mail and wire fraud, but his lawyer told reporters that he hoped for a lenient sentence.

"We're hopeful and we expect that there will be fairness in the process," defense attorney Reid Weingarten said on the steps of the Washington federal courthouse.

"A person who contributed so much to his community, done so much for so many people, will and should get credit for it."

Weingarten said Jackson's "serious health issues" - which include bipolar disorder - led to his reckless and criminal behavior, but that after "great treatment" Jackson has "gotten his arm around the problem."

"He has two small children and we're hopeful in short order or reasonably short order Jesse again will be a full-time, wonderful, caring, devoted dad," Weingarten added.

The children may be without both their parents for some time.

Jackson's wife, former Chicago alderwoman Sandy Jackson, pleaded guilty to submitting false tax returns as part of the deal the couple reached with prosecutors.

She faces up to three years in prison but prosecutors agreed to ask for just 18 to 24 months.

They will also have to forfeit their ill-gotten goods, repay the money stolen and face steep fines.

Jackson took a leave of absence from Congress last June to receive treatment for bipolar disorder and related depression, and for two months his whereabouts and condition were the chief mystery of Washington's political circuit.

Earlier, he had been implicated in ousted Illinois governor Rod Blagojevich's scheme to auction off President Barack Obama's vacated Senate seat in 2008.

Blagojevich was impeached and then jailed for bribery, but Jackson was never charged with any wrongdoing related to the scandal. However, prosecutors continued to dog his steps and discovered the diverted funds.

Jackson was first elected to Congress in 1995 after having worked with his father's Rainbow Push organisation.