The Bush administration has offered up to $17.4 billion in emergency loans to ailing US automakers General Motors and Chrysler LLC, reports quoting White House sources said.

Announcing the loan programme, president George W Bush said it would be irresponsible on the part of the government at a time of economic crisis to let the car makers collapse.

But, some of the funds must come from the second half of the $700 billion financial rescue fund after exhausting the first $350 billion in less than three months.

The Treasury which has exhausted nearly $335 billion of the first part of the $700 billion economy bailout package, mostly to recapitalise banks, has agreed to lend $13.4 billion of the remaining to General Motors and Chrysler.

The loan, spread over three years, would require the automakers to limit executive compensation and other perks, and also provide warrants for non-voting stocks.

The remaining $4 billion in aid is contingent on the administration seeking access to the second half of the $700 billion financial rescue plan, known as the Troubled Asset Relief Program, the administration official said.

Treasury secretary Henry Paulson also urged Congress to release the second half of the $700 billion, but lawmakers who are critical of the government denying help to harried homeowners can deny Paulson the remaining funds.

In a statement issued in Washington, Paulson today urged Congress to ''release the remainder of the TARP to support financial market stability.''

He said  he will discuss the issue with the congressional leadership and the President-elect's transition team.

While the Treasury has made provision for allocating most of the first $350 billion, much of it is still to be disbursed and that seems to have give confidence to Paulson in finding money ''in the very short-term.''

While both GM and Chrysler have been forced to idle plants and lay off thousands of workers across North America, Toyota Motor Corp is expected to report its first annual operating loss in 71 years in the year to end-March.

A collapse of the auto industry would be another blow to President George Bush's troubled Republican government.