In a speech on Monday to the Council on Foreign Relations in New York, he said that the world community had not done enough to help those countries hit by the Asian financial crisis.

President Clinton calls G7 summit to attack the global financial crisis and for Congress to pay the US's IMF bill

"This is the biggest financial challenge {facing the world in half a century. The US has an inescapable obligation to lead," he said.

The speech was seen in some circles as an attempt by the President to re-assert his leadership and re-build credibility after the release of the damaging Starr Report into the White House sex scandal.

Urgent meeting

Mr Clinton's comments came as senior finance officials from the Group of Seven leading industrial nations pledged to co-operate closely to stave off a global financial crisis at a meeting in London.

President Clinton said he would ask finance ministers and central bankers from the G7 group of leading industrial countries meet within 30 days to formulate a plan to recast the world's financial system.

The most likely timing for such a meeting is the annual meeting ot the World Bank and International Monetary Fund to be held in Washington later this month.

The G7 countries are the US, Britain, France, Germany, Italy, Japan, and Canada.

Pressure on Congress

President Clinton also called for Congress to pass stalled legislation giving more funds to the IMF to help bail out countries in trouble. The IMF is seeking an increase in its quota to replenish the $100bn in funds it paid out this year to Asia and Russia.

He warned the Republican-dominated Congress that the US too would pay the penalty if the emerging market crisis was not checked.

One of six key issues in combatting the crisis was the US paying its IMF funding bill so the agency could continue its work shoring up the financial systems of crisis-affected nations, Mr Clinton said.

Much of the world in recession

President Clinton echoed the remarks made last week by Alan Greenspan, head of the US Central Bank, the Federal Reserve, that the US could not remain an oasis of prosperity with the rest of the world in recession.

The President said that the threat of recession has now replaced worries about inflation.

"The balance of risks has now shifted with a full quarter of the world's populations now living in countries with negative economic growth," he said.

"The leading nations of the world must act together to spur global growth," he added.

His comments led to speculation that central banks would soon cut interest rates around the world.

And he called for urgent short-term measures to help revive the economies of those hit hardest by the economic and financial crisis.

These include:

• A comprehensive solution to private sector debt problems for third world companies
• an increased social safety net for developing countries funded by the World Bank
• increased IMF funds to stem potential currency devaluation in Latin America
• a greater commitment to growth by Western economies

Markets around the world, which were already moving up, responded positively to Mr. Clinton's remarks.

London G7 meeting

Officials from the G7, Russia, the IMF, EU and World Bank also discussed the ongoing financial crisis in Russia.

The meeting emphasised that Western aid to Russia was tied to a continuation of market reforms under new prime minister Yevgeny Primakov.