WASHINGTON - With job losses soaring nationwide, Senate Democrats reached agreement with key Republicans Friday night on an economic stimulus measure at the heart of President Barack Obama's plan for combatting the worst recession in decades.

"The American people want us to work together. They don't want to see us dividing along partisan lines on the most serious crisis confronting our country," said Senator Susan Collins of Maine.

She's one of two Republican senators who signalled support for the bill.

Officials put the cost of the measure at $780 billion in tax cuts and new spending combined.

No details were immediately available, and there appeared to be some confusion even among senators about the price tag as floor debate continued late into the night.

The agreement capped a tense day of backroom negotiations in which Senate Majority Leader Harry Reid, joined by White House chief of staff Rahm Emanuel, sought to attract the support of enough Republicans to give the measure the needed 60-vote majority.

In addition to Collins, Senator Arlen Specter, a Pennsylvania Republican, said he would vote for the bill. Senator Olympia Snowe, a Maine Republican, remained uncommitted.

Democrat Edward M. Kennedy, who is battling a brain tumour, arrived in Washington in case his vote turned out to be needed.

The Massachusetts senator has been in Florida in recent days and has not been in the Capitol since suffering a seizure on Inauguration Day more than two weeks ago.

Democrats hold a 58-41 majority in the Senate, including two independents, but it takes 60 votes to pass the stimulus bill because it would raise the federal deficit.

At $780 billion, the legislation would be smaller than the measure that cleared the House on a party-line vote last week.

It also would mean a sharp cut from the version that has been the subject of Senate debate for a week. That measure stood at $937 billion.

Beyond the numbers, though, any agreement would mark a victory for the new president and would keep Democratic leaders on track to fulfil their promise of delivering him a bill to sign by the end of next week.

Obama said further delay would be "inexcusable and irresponsible" given Friday's worst monthly unemployment report in a generation -- 598,000 jobs lost in January and the national unemployment rate rising to 7.6 per cent.

And late Friday, federal regulators announced the closures of two banks, First Bank Financial Services in Georgia and Alliance Bank in California, the seventh and eight failures this year of federally insured banks.

"The world is waiting to see what we're going to do in the next 24 hours," said Reid who has spent much of the week trying to balance demands among moderates in both parties against pressure for a larger bill from liberals in his own rank and file.

By midday, the majority leader had spoken once with Obama by phone and five times with Emanuel. He met with Collins and Specter as well as Senator Ben Nelson, a conservative Nebraska Democrat who had long advocated cuts in the House-passed bill.

"We're clearly not there yet," Collins said at one point.

She spoke with Obama at the White House earlier in the week, though, and told reporters as she shuttled between meetings in the Capitol: "I'm still hopeful that we can achieve a compromise because the stakes are high and the goal is important."

One Republican-proposed document that circulated earlier called for cuts of $60 billion from money Democrats want to send to the states. That money is targeted to avoid budget cuts for schools as well as law enforcement and other programs.

Talk of cuts in proposed education funds triggered a counterattack from advocates of school spending as well as unhappiness among Democrats.

One, Senator Carl Levin of Michigan, told reporters he and others hoped that some of the funds on the chopping block would be restored next week when negotiations open on a House-Senate compromise.

At its core, the legislation is designed to ease the worst economic recession in generations, and combines hundreds of billions of dollars in new spending with tax cuts.

Much of the money would go for victims of the recession in the form of food stamps, unemployment compensation and health care.

There are funds, as well, for construction of highways and bridges.

But the administration also decided to use the bill to make a down payment on key domestic initiatives, including creation of a new health technology industry and so-called green jobs designed to make the country less dependent on imported oil.

And Democrats in Congress decided to add additional huge sums for the states struggling with the recession, as well as billions more for favoured programs such as parks, the repair of monuments in federal cemeteries, health and science research and more.