Hong Kong's Hang Seng index was up 464.35 points, or 3.5 per cent, at 13,911.77.
South Korea's Kospi gained 1.9 per cent to 1,221.70 points.
Asian markets have risen sharply in recent days, with the Nikkei rising 20 per cent or over the last two weeks since it hit a quarter-century low.
Most other markets in the region were also higher following the surge in US stocks on Monday, which saw the Dow Jones Industrial Average closing 6.8 per cent or 497.48 points higher to 7,775.86 - the biggest point gain in more than four months.
"The long-awaited US programme is finally out, and that is significant enough to bring some stability to the market," Minoru Shiori, the chief manager of currency trading at Tokyo-based Mitsubishi EFJ Securities, said.
Wall Street surge
The surge on Wall Street followed the US government's announcement that the Public-Private Investment Programme will use both public and private capital to buy up mortgage-backed assets clogging the banking system.
The move, central to efforts by Barack Obama, the US president, to kickstart the ailing US economy, won a vote of confidence from China, the biggest holder of US government debt, which said it would continue to buy US treasuries.
|Obama said his team was "very confident" it was "moving in the right direction" [AFP]
Obama said his economic team was "very confident" that the latest effort to aid ailing banks would work.
"We believe that this is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen over night. There's still great fragility in the financial systems. But we think we are moving in the right direction and we are very confident," he said.
The US also received further positive economic news on Monday, with the National Association of Realtors saying that sales of existing homes grew 5.1 per cent to an annual rate of 4.72 million last month from 4.49 million units in January - the largest sales jump since July 2003.
However, the average sales price plunged to $165,400, down 15.5 per cent from $195,800 a year earlier.
Timothy Geithner, the US treasury secretary, said on Monday in a newspaper article that the "toxic asset" plan was part of the US government's strategy to "resolve the [financial] crisis as quickly and effectively as possible at least cost to the taxpayer".
"We [must] strike the right balance between our need to promote the public trust and using taxpayer money prudently to strengthen the financial system, while also ensuring the trust of those market participants we need to do their part to get credit flowing to working families and businesses," he wrote in the Wall Street Journal.
Al Jazeera's Rosiland Jordan, reporting from Washington DC, said the Obama administration considered the programme the "least bad option" of all the others they were discussing, exposing the US government to the least possible amount of risk rather than letting the slump continue and risking a second economic depression.
The US treasury's plan comes as Obama prepares to meet fellow leaders of the world's top 20 economies at a financial summit in London on April 2.
Reluctant to lend
The US government has poured billions of dollars into US banks after many suffered huge losses following the subprime mortgage crisis and from the global economic turmoil.
"You cannot fix this problem by stuffing money into the banks"
James Galbraith, economist
However, many still hold these "toxic" mortgage-related assets on their books, making the institutions reluctant to lend money to businesses and citizens.
Initially, the treasury will put $75bn to $100bn to launch the scheme, taking the money from the $700bn financial rescue bailout approved last October.
The government money would be put alongside private capital and then leveraged up to $500bn, or possibly double that amount, with the help of the Federal Deposit Insurance Corporation, a US bank regulator, and the Federal Reserve.
Under the plan, the government will provide the lion's share of the funding to buy up the "toxic assets".
Private-sector purchasers will establish the value of the loans and securities purchased under the programme themselves to protect the government from overpaying for the assets.
The plan has been criticised by some economists, with James Galbraith, an economist and professor of government at the University of Texas in Austin, telling Al Jazeera that the plan would not work as the problem itself had been "misconceived".
"This is not a blockage where our problem is the banks are unwilling to lend, this is a problem of deep depression and collapse in asset values," he said.
"Without addressing the underlying problems of employment, income and household incomes we're not getting out of this.
"You cannot fix this problem by stuffing money into the banks. When it fails we're going back to where we started and we'll need to address those underlying issues."
Paul Krugman, a recent winner of the Nobel prize for economics, also dismissed the US government's move as "cash for trash" in a news article, saying it failed to address fundamental flaws in the US financial system.
"The Obama administration is now completely wedded to the idea that there's nothing fundamentally wrong with the financial system - that what we're facing is the equivalent of a run on an essentially sound bank," he wrote in a column for The New York Times on Saturday.
"And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won't be able to come back to congress for a plan that might actually work."