President George W Bush gave a primetime televised address to convince US citizens of the need for the proposed rescue.
He said that "the market is not functioning properly," and warned there was a risk of the US economy falling into recession.
"We must not let this happen," said President Bush.
The top officials have been making the case for the bail-out, arguing that failure to act would unleash what some have called "catastrophe".
And billionaire investor Warren Buffett said the rescue plan was "absolutely necessary" to help pull the financial system out of an "economic Pearl Harbour".
Both Democrat and Republican politicians have expressed strong scepticism about the proposal, under which a federal fund could buy bad debt from financial institutions with "significant operations in the US".
The fund would aim to sell off these mortgage-related debts in the future when, the Treasury says, their value might have risen.
Congressmen from both sides said they wanted assurances that the plan would benefit ordinary American home-owners as well as Wall Street.
Some have gone further, calling the plan a potential waste of public money.
Mr Paulson told the House Financial Services Committee that the entire proposal was about "benefiting the American people, because today's fragile financial system puts their economic well-being at risk".
And he said that there was a good chance that - when the assets bought by government were resold, much of, or perhaps even all, of the $700bn could be recouped.
"The program we have proposed is not a spending program. It is an asset purchase program, and the assets which are bought and held will ultimately be resold with the proceeds coming back to the government," Mr Paulson said.
Meanwhile Mr Bernanke said that for the economy to pick up required a "return to more normal functioning" of the financial system - allowing credit to flow and giving a boost to the housing sector.
"Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress.
"Action by Congress is urgently required to stabilise the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy."
He added that the US economy continued to face substantial challenges, including a weakening labour market and elevated inflation.
"Notably, stresses in financial markets have been high and have recently intensified significantly," he said.
"If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse."
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