Washington  - A federal bailout of Fannie Mae and Freddie Mac could cost as much as 25 billion dollars, a congressional research arm reported Tuesday as the US government once again pressured legislators to approve an emergency rescue plan for the two mortgage giants.

The Congressional Budget Office (CBO) said there was a "significant likelihood" that Fannie and Freddie - which together underwrite about half of all US home loans - would require government intervention over the next two years.

The Treasury Department on July 14 unveiled a proposal that would allow the government to effectively guarantee all mortgages in the event of a collapse of Fannie and Freddie, as well as make direct loans to both firms to shore up their finances. Congress still has to approve the plan.

The companies' stock prices have plummeted in recent weeks amid investor concern over the capital positions of the two government- chartered lenders, which led a much broader sell-off on Wall Street.

The CBO said there was a more than 50-per-cent chance the Treasury would never have to put its rescue plan into action, but warned that "conditions in the housing and financial markets could deteriorate more than already reflected" in Fannie and Freddie's current balance sheets.

Treasury Secretary Henry Paulson again defended his plan Tuesday as crucial to keeping global financial institutions afloat and urged quick congressional approval.

"Because of their size and scope, Fannie and Freddie's stability is critical to financial market stability," Paulson said in a speech in New York.

"Investors in our nation and around the world need to know that we understand how important these institutions are to our capital markets broadly, and to the US economy," he said. (dpa)