George Bush, the US president, has signed a $168bn economic stimulus plan into law, describing it as "a booster shot" for the ailing US economy.
The two-year plan means many US households will receive between $300 and $1,200 in tax rebate cheques, which the government hopes people will spend to boost the economy.
The US leader signed off the plan during a White House ceremony attended by Democratic and Republican leaders of the US congress.
Of the total, $152bn is earmarked for 2008.
The US economy grew by just 0.6 per cent in the last quarter of 2007 and the housing market has plummeted following the subprime mortgage crisis.
In January, the job market shrank for the first time in 53 months and fears of a recession have grown.
Bush admitted the US economy was going through a rough patch but said it could absorb problems such as recession, war and corporate scandals.
"The genius of our system is that it can absorb such shocks and emerge even stronger," he said.
Democratic criticism
However, Harry Reid, the senate Democratic leader, blamed the Bush administration for being partly responsible for the crisis.
"We will fight for families struggling with rising energy prices and a national housing crisis. And we will fight to reverse President Bush's disastrous budget policies that have hurt the middle class," he said.
Rebate cheques are due to start being sent out to taxpayers in May.
The plan also includes a provision sought by the Democrats which allows some low-income workers, retirees on social security and disabled veterans who do not earn enough money to owe income taxes, to receive a cheque.
Businesses will also get tax breaks for investing in new plants and equipment as part of the plan.
In addition to the stimulus package, the US central bank has cut interest rates to three per cent from 5.25 per cent since mid-September in a bid to address the credit crunch that has rocked global markets.