A spokeswoman for the president said he would give a broad outline of steps to cut the budget and raise taxes.

Economic officials, including Finance Minister Pedro Malan, will provide further details of the three-year fiscal plan on Wednesday.

Brazilian stock exchange traders were edgy ahead of the announcement

The proposals are seen as crucial to prevent the world's eighth largest economy from becoming the latest victim of the global financial turmoil.

Austerity measures must also be introduced if Brazil is to qualify for a multi-billion dollar loan from the International Monetary Fund (IMF).

The government needs to save or raise at least $20bn to meet a target agreed with the IMF of achieving a budget surplus, excluding debt costs, of 2.6% of gross domestic product (GDP) in 1999.

Brazil currently has a budget deficit of more than 7% of GDP.

Newspapers have published previews of many of the steps under discussion, including a proposal to cut the health and education budgets by 10%.

Both areas have already seen there funding cut recently as part of a $5bn savings drive.

Plan unpopular

Mr Cardoso faces a tough challenge pushing through what could well be unpopular changes after his supporters were defeated in elections in three of Brazil's most important states at the weekend.

Some lawmakers have vowed to resist some of the measures likely to be included in the plan, including higher taxes the federal government retains from spending by local governments under a controversial Fiscal Stabilisation Fund.

Talk that a financial transactions tax could be raised to 0.35% from 0.2% has also caused concern, after earlier reports that the tax would rise to 0.3%.

Among the most controversial suggestions were proposals for retired civil servants to contribute to the pension plan and public sector workers to make social security payments.

"The government is conscious that it will not manage to win approval for all the measures it wants to, but it will not compromise on reaching a fiscal adjustment for next year of 25bn reals ($21bn)," said political consultancy Santa Fe Ideias.

President Cardoso is to hold a meeting with political party leaders on Wednesday to discuss the plan.