Mr Mbeki has denied interfering in the case against Jacob Zum

South African President Thabo Mbeki will accept a call to resign by the governing African National Congress (ANC), his spokesman has said.

Mukoni Ratshitanga said Mr Mbeki would leave his post once "all constitutional requirements have been met".

It comes days after a High Court judge suggested that Mr Mbeki may have interfered in a corruption case against his rival, ANC leader Jacob Zuma.

Mr Zuma was expected to succeed Mr Mbeki in scheduled elections next year.

Mr Mbeki has called for his cabinet to meet on Sunday.

Parliament is expected to meet in the coming days to formalise the resignation, and is likely to appoint the parliamentary speaker as interim leader.

The decision to call for Mr Mbeki's early resignation was taken at a meeting of the ANC's National Executive Committee (NEC).

[Mr Mbeki] agreed that he is going to participate in the process and the formalities ANC Secretary General Gwede Mantashe

The ANC's Secretary General Gwede Mantashe said the move had followed "a long and difficult discussion".

He said Mr Mbeki, who has ruled for more than a decade, "did not display shock" at the decision and had agreed to participate "in the process and the formalities".

The decision had been taken for "stability and for a peaceful and prosperous South Africa", Mr Mantashe told a news conference.

The ANC secretary general said this was not punishment for Thabo Mbeki, adding that the president would be given the chance to continue his role as mediator in Zimbabwe.

At the same time, ANC cabinet members are being urged to remain in government to ensure continued stability.

Political interference

The BBC's Peter Biles in Pretoria says this dramatic decision will fundamentally change South Africa's political landscape.

Mr Mbeki fired Jacob Zuma as deputy president in 2005 after his financial adviser was found guilty of soliciting a bribe on his behalf.

But Mr Zuma returned to the political stage to topple his rival as ANC leader in bitterly contested elections last year.

Earlier this month a High Court judge dismissed corruption and other charges against Mr Zuma, saying there was evidence of political interference in the investigation.

In his ruling the judge said it appeared that Mr Mbeki had colluded with prosecutors against Jacob Zuma as part of the "titanic power struggle" within the ANC.

The accusation was strongly denied by Mr Mbeki.

Weakened position

Mr Mbeki, who has devoted his life to the ANC, succeeded Nelson Mandela as the party's president in 1997.

He became leader of South Africa in 1999 and won a second term in 2004.

US President George W Bush has defended a rescue package to tackle the worst financial markets crisis for decades.

The cost to taxpayers from shoring up markets was better than the alternative of job losses and blighted retirement accounts, he said in a radio address.

The US Treasury is proposing a fund worth up to $800bn (£440bn) to buy back a large proportion of the bad debt in the US mortgage market.

The fund would hold the debts until they can be sold off in the future.

Mr Bush said the measures required the US "to put a significant amount of taxpayer dollars on the line".

"But I'm convinced that this bold approach will cost American families far less than the alternative," he said.

"Further stress on our financial markets would cause massive job losses, devastate retirement accounts, further erode housing values, and dry up new loans for homes, cars and college tuitions."

'Queasy' Congress

Congressional and Treasury officials will meet later to work on the plan.

Talks will continue throughout the weekend and the package is expected to be signed into law within days.

Share prices rallied after days of turmoil

It is believed the intention is to find a way of bringing all the bad debts into one organisation whose task will be to hold them on behalf of the taxpayer until they can be sold off at some point in the distant future, says the BBC's Justin Webb in Washington.

There are some members of Congress who are queasy at the thought of the taxpayer taking on hundreds of billions of dollars of currently worthless debt, he says.

But the leader of the Democrats in the House of Representatives, Steney Hoyer, said he expected quick action.

After a week of turmoil, stock markets around the world rallied on news of the rescue plan, with the UK's FTSE 100 closing on Friday with its biggest one-day gain.

'Maximum impact'

Earlier, Mr Bush said swift, politically bipartisan action was needed to keep the US economy from grinding to a halt as problems sparked by the credit crisis had begun to spread through the entire financial system - leaving jobs, pensions and companies under threat.

"These are risks the US cannot afford to take. We must act now to protect economic health from serious risk," he added.

PESTON'S PICKS For us here in the UK the big question is whether what Paulson's proposing makes it more or less likely that our government will have to launch a similar rescue scheme for our banks

Treasury Secretary Henry Paulson said a "bold" move was needed to restore the financial system's health.

Giving few details, Mr Paulson said the Bush administration was stepping in with a plan to remove so-called "toxic debts" from US banks' balance sheets.

The programme, he said, must be "large enough to have maximum impact".

In the meantime, he said that the government would be stepping up action to increase the availability of capital for new home loans.

Once this difficult period was over, Mr Paulson said, the government's next task would be to overhaul bank regulations.

The chairman of the Senate Banking Committee, Christopher Dodd, said he and his colleagues would need to see the details of the plan first, but he accepted that quick action would be needed.

"We understand the gravity of the moment," said the Democratic senator.

Rescue moves

Earlier on Friday, the government announced plans to guarantee US money market funds - mutual funds that typically invest in low-risk credit such as government bonds and are often used by pension funds - up to a value of $50bn, in a move to further restore confidence.

The Treasury and the Fed have finally realised the depth and systemic nature of the crisis John Ryding, economist

Meanwhile, the Securities and Exchange Commission temporarily banned "short-selling" in the stocks of 799 companies. Short-selling is a form of trading which effectively bets that the value of a company's shares will fall.

"The Treasury and the Fed have finally realised the depth and systemic nature of the crisis," said John Ryding, an economist at RDQ Economics

"We believe that these actions will constitute the wider firebreak that will contain the crisis."

Mounting fears that the credit crisis is beginning to spread out through the financial system have rocked shares and companies recently.

Investment giant Lehman Brothers collapsed this week, rival Merrill Lynch was bought out by Bank of America, and the US government has bailed out insurer AIG with an $85bn rescue package and state-backed mortgage lenders Fannie Mae and Freddie Mac.

A massive bomb attack has hit the Marriott Hotel in Pakistan's capital, Islamabad, killing at least 40 people.

The BBC's Barbara Plett, who is at the scene, says the blast created a 20ft (6m) deep crater, and destroyed the entire front section of the hotel.

She says heavy equipment has been brought in to clear the debris so that firefighters can reach the building, which is still engulfed in flames.

Police say they believe the blast was a suspected suicide car bombing.

The owner of the hotel told the BBC that the explosion occurred when a lorry, which was being checked by security staff and sniffer dogs at the hotel entrance, blew up.

The explosion is thought to have been caused by more than a tonne of explosives. Police are warning that the hotel could collapse.

Pakistan has seen a lot of violence over the past year in its battle with Islamist militancy but Islamabad has never seen anything like this before, our correspondent says.

Heavy security

In pictures: Islamabad blast

A huge area of the 290-room hotel remains on fire hours after the explosion.

The BBC's Barbara Plett says the emergency services have been unable to reach the upper floors of the hotel, where more people are feared to be trapped.

A hotel employee, Mohammad Sultan, said he was in the reception when something exploded, forcing him to the ground.

"I don't understand what it was, but it was like the world is finished," he told the Associated Press news agency.

The Marriott is the most prestigious hotel in the capital, and is located near government buildings and diplomatic missions.

It is popular with foreigners and the Pakistani elite. Security there is tight, with guests and vehicles subject to checks.

The Marriott has previously been the target of militants. Last year a suicide bomber killed himself and one other in an attack at the hotel.

Insurgency

The bomb attack comes just hours after Pakistan's newly installed President, Asif Ali Zardari, said he would not allow Pakistan's territory to be violated by terrorists or foreign powers fighting them.

In his first speech to MPs since he replaced Pervez Musharraf in August, he vowed instead to "root out terrorism and extremism wherever and whenever they may rear their ugly heads".

Pakistan has been a key ally of the US in its "war on terror"

Pakistan has been a key ally of the US in its "war on terror", but relations have become strained over tactics.

In recent months, Pakistan has voiced growing disquiet over US raids targeting militants in its territory, launched from neighbouring Afghanistan.

Al-Qaeda and Taleban militants based in Pakistan's north-west tribal region have repeatedly carried out attacks across the border in Afghanistan.

Militants have also carried out waves of attacks in Pakistan in recent years.

Just over a year ago, Pakistani army commandos stormed Islamabad's Red Mosque - also known as Lal Masjid - which had been taken over by pro-Taleban clerics.

The operation brought an end to the bloody siege. But Islamist militants responded with a wave of suicide bombings around the country that killed around 1,000 people.

Profile: Gen Petraeu

General David Petraeus, the outgoing US military commander in Iraq credited for improving security there, has passed control to Lt Gen Raymond Odierno.

The US Defence Secretary, Robert Gates, presided over the ceremony in Baghdad.

Gen Petraeus, who assumed command in February 2007, implemented the "surge" plan, which is credited with reducing the level of violence dramatically.

In his next job leading the US Central Command, he will oversee operations in the Middle East and Afghanistan.

He will take up the post in late October, working from headquarters in Tampa, Florida.

Achievements

Gen Petraeus handed the command of the 146,000-strong US force at a ceremony in one of Saddam Hussein's former palaces on the outskirts of the capital.

Profile: Gen Odierno Sadr City comes back to life

Levels of violence were high across Iraq when Gen Petraeus came to the post in February 2007 - in Baghdad alone, there were 40 car bombings that month.

Mr Gates recalled the challenges that Gen Petraeus had faced on arrival in Baghdad.

"Darkness had descended on this land," Mr Gates said. "Merchants of chaos were gaining strength. Death was commonplace."

He lauded Gen Petraeus and Gen Odierno for their achievements in Iraq, where Gen Odierno served as deputy US commander in 2007.

"Slowly, but inexorably, the tide began to turn," Mr Gates said. "Our enemies took a fearsome beating they will not soon forget."

'Long struggle'

Under the surge plan - which saw nearly 30,000 US troops deployed to trouble spots in Iraq - coalition forces moved out of large bases and into highly populated areas.

Since then, the security situation has improved markedly, with less violence and fewer deaths, and progress on both the political and economic fronts.

The BBC's Mike Sergeant in Baghdad says two other factors were crucial: a ceasefire by the Shia militia and deals with former Sunni insurgents.

But on the eve of Gen Petraeus's departure, a female suicide bomber blew herself up in Diyala province, killing 22 people - a reminder that violence could easily escalate again.

The big challenge for Gen Odierno will be finding ways to stop that sort of violence escalating at a time when the number of US troops are shrinking, our correspondent says.

In a BBC interview before his departure, Gen Petraeus said he would never declare victory in Iraq.

He said the recent security gains were "not irreversible" and that the US still faced a "long struggle" in the country.

When asked if US troops could withdraw from Iraqi cities by the middle of next year, he said that would be "doable".

Last week, Mr Bush announced a cut of 8,000 US troops in Iraq by February - with some 4,500 being sent to Afghanistan.