Washington - The US Federal Reserve, in a drastic new effort to keep the financial sector afloat, said Wednesday it would buy up more than 1 trillion dollars in Treasury and mortgage-backed securities.

Surprising many analysts, the US central bank said it would buy up to 300 billion dollars in long-term Treasury securities over the next six months and another 750 billion dollars in mortgage-related assets at the heart of the financial crisis.

The moves dramatically expand the Federal Reserve's balance sheet to nearly 3 trillion dollars and marks the latest in a series of unprecedented efforts to revive lending by US banks.

The Fed also kept its key interest rate at a record low of 0-0.25 per cent as the United States continues to struggle through a deep recession.

"In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the Federal Open Market Committee said in a statement.

The central bank has held its benchmark federal funds rate at the unprecedented level since December, exhausting its monetary policy options to stem the economic slide. (dpa)