The US commerce department said the economy contracted by 6.3 per cent in
November to December last year, slightly faster than previous estimates of 6.2 per cent.

Meanwhile, the number of new unemployment claims also rose in the US to 652,000 for the week ending March 21, up from the previous week's revised figure of 644,000 but less than economists feared.

The figure means the total number of people claiming unemployment benefit in the US has leapt to 5.56 million, higher than economists' projections of 5.48 million, and a ninth straight record-high.

No 'turf wars'

In depth
Geithner said a key component of the Obama administration's plans, which would be co-ordinated with congress, would be an overhaul of the US financial regulatory system, which critics say contributed to the US's financial crisis.

"We must not let turf wars or concerns about the shape of organisational charts prevent us from establishing a substantive system of regulation that meets the needs of the American people," Geithner told the House of Representatives financial services committee.

Geithner said hedge funds should be registered with the US Securities and Exchange Commission (SEC) and complex financial instruments such as credit default swaps and derivatives, blamed for the subprime mortgage crisis, be more tightly controlled, along with money market funds.

In addition, the US will launch a new initiative to address supervision, tax havens, and money-laundering issues in weakly regulated jurisdictions, Geithner said.

"We are moving to ensure that we are equipped with both in the future, and in the process,  that we modernise our 20th century regulatory system meet 21st century financial challenges," he said.

The proposals will form the basis for discussions on regulatory reform when Barack Obama, the US president, meets leaders from the Group of 20 rich and developing nations on April 2.

In an earlier appearance before the committee on Tuesday, Geithner had called for the government to be granted broader powers to seize struggling financial institutions in a bid to avert further collapses.

Obama also said on Tuesday that the US was "beginning to see signs of progress" in its efforts to combat recession.

On Wednesday, the US commerce department said sales of new homes in the US rose 4.7 per cent in February after six months of consecutive declines, adding to last week's 5.1 per cent rise in existing home sales, raising some hope that the US recession could be easing.