Washington - US growth will remain weak for "several" quarters as the world's largest economy works through a financial and housing crisis that has sharply reduced spending, Federal Reserve Chairman Ben Bernanke warned Monday.

Amid fears that the US has already dipped into a recession, Bernanke told a congressional hearing that a second fiscal stimulus package could help kick-start the economy.

Congress passed its first stimulus package in the spring, offering 150 billion dollars in tax rebate cheques that raised consumer spending and helped boost growth in the second quarter.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told the Budget Committee of the House of Representatives.

The White House was also keeping an "open mind" about the prospects of a second stimulus but was waiting for more details from Congress, spokeswoman Dana Perino said.

Bernanke painted a depressing picture of the state of the economy in his opening statement before the committee. The US central bank head said short-term lending between banks had become "essentially unavailable" as shaky financial institutions have continued hoarding cash.

Though inflation has eased amid falling oil prices, "the pace of economic activity is likely to be below that of its longer-run potential for several quarters," Bernanke said.

Stocks in the US and around the world have plummeted in the past few weeks. Bernanke said the Treasury's broad new powers to invest in banks under the 
700-billion-dollar rescue plan - which has been mirrored by a number of other countries - would help restore confidence.

But he warned that "the stabilization of the financial system, though an essential first step, will not quickly eliminate the challenges still faced by the broader economy."

Nine banks have already expressed a willingness to take part in the bail-out plan, which has set aside 250 billion dollars to make direct stock purchases in participating financial institutions.

Stocks have declined in part due to fears of more banks failing in the future. Treasury Secretary Henry Paulson, who unveiled the application process for institutions on Monday, assured there was enough money to go around for any banks that needed government help.

The priority is to provide banks with enough capital to restart lending to consumers and each other. But regulatory officials cautioned that even a taxpayer stake did not guarantee a bank would survive the financial crisis. (dpa)