The president of the European Central Bank (ECB) has announced new plans to allow unlimited bond-buying in a bid to lower debt for struggling eurozone countries.

Mario Draghi's new programme revealed on Thursday followed his pledge in July to make every effort to preserve the euro.

Draghi said the move, aimed at the secondary market, would address bond market distortions and "unfounded" fears of investors concerning the survival of the currency.

Addressing a news conference, Draghi said: "Under appropriate conditions, we will have a fully effective backstop to prevent potentially destructive scenarios."

He said the scheme, which aims to focus on bonds maturing within three years, was strictly within the ECB's mandate.

Only one member of the ECB Governing Council, Germany's Bundesbank, opposed the programme.

Investors had been anxiously waiting to hear how decisively the ECB would act to help bring down the borrowing costs of Spain and Italy, following last week’s disagreements amongst policymakers on the plan.

'Safety net'

Markets responded favourably to Draghi's plans with eurozone blue chip stocks soaring to 3.2 per cent - levels not seen since March.

Andrew Cox, G10 strategist at CitiFX in New York, said: "The details ... released today add to the credibility of the safety net taking shape in the eurozone and should support demand for eurozone assets."

Pressure on Draghi intensified after an unsubstantiated German newspaper report last week that Bundesbank chief Jens Weidmann had considered resigning over his opposition to bond-buying, although several sources say he has made no such threat and believes in staying at the table to argue his case.

Renewed ECB intervention in the eurozone's bond markets is critical to buying time for governments to come up with a longer-term response to the bloc's debt crisis, which started in early 2010.

The ECB kept its interest rate unchanged on Thursday at 0.75 per cent.