The U.S. government will announce as soon as Monday a long-awaited plan to try to get bad assets off the books of banks, a cornerstone of its efforts to tackle the credit crisis, The Wall Street Journal reported.

The Obama administration, battling a deepening recession, is set to adopt a three-pronged approach to ridding the financial system of so-called toxic assets, the newspaper said on its website on Friday.

The plan would create an entity, backed by the Federal Deposit Insurance Corp, a U.S. banking regulator, to buy and hold loans and would expand a Federal Reserve facility to buy asset-backed securities that are weighing on banks, it said.

The government will also carry out plans, outlined last month, to purchase mortgage-backed and other securities via public and privately financed funds that would be run by private investment managers, the report said.

The Treasury Department and Federal Reserve declined to comment on the report.

The Bush administration tried without success late last year to set up a mechanism to get bad assets off the balance sheets of commercial banks.

Obama's Treasury secretary, Timothy Geithner, has said he plans to try again and has outlined a proposal to soak up as much as $1 trillion in assets through a public-private program.

But investors have grown increasingly concerned that his efforts are running into problems more than a month after he outlined the plan.

A lack of interest among big investors in the debut this week of a new Federal Reserve consumer lending program has added to fears that private capital may shun the toxic-asset plan amid public outrage over out-sized executive bonuses.

Many big private investors are worried they could be subject to tough new rules of engagement in U.S. financial rescue efforts, just as Congress has pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group.

(Editing by Peter Cooney)