The U.S. Treasury will propose a $500 billion to $800 billion government program to

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take toxic mortgage-related assets off the books of U.S. financial firms, banking industry sources said on Friday.

The sources said the government would acquire residential and commercial mortgages and mortgage-backed securities under the proposal, which needs Congressional approval. A Treasury spokeswoman declined to comment.

The moves capped a week in which financial markets faced their most serious confluence of crises since the Great Depression in the 1930s and threatened national economies and the worldwide banking system.

The sources said the government would conduct reverse auctions for $50 billion tranches, with one source saying additional increments would be taken in $10 billion blocks and that five outside asset managers would help manage the purchases.

The government would not face a deadline for disposing the assets it acquires under the plan being sent to Congress, according to one source. The source said any assets being offloaded would have had to have been on the books of any participating financial firm as of Sept. 15.

Lawmakers have said they would move quickly to try to implement an asset-relief plan, which Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have argued is needed to ensure bad debts do not take down the financial system and the economy.