The US government plans to put government sponsored mortgage finance companies Fannie Mae and Freddie Mac under federal control, according to media reports.

The New York Times and Washington Post newspapers reported late Friday, that this could be the largest financial bailout in the nation's history.

The two government sponsored enterprises (GSEs) own or guarantee almost half of the country's $12 trillion in outstanding home mortgage debt.

The Wall Street Journal reported earlier on Friday that the US Treasury Department is close to finalising a plan to restructure the two companies that includes changes to their senior management.

The plan could be announced as early as this weekend, the Journal said.

US Treasury spokeswoman Brookly McLaughlin declined to comment on the Journal report on Friday. Fannie Mae and Freddie Mac spokesmen also declined to comment.

The Federal Reserve, which earlier this year gave both companies the right to borrow from its discount window if necessary, declined comment also.

The two firms would be placed in "conservatorship", the Washington Post said, citing sources familiar with the discussions.

The value of the company's common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares, would be protected by the government, the Washington Post said.

Senior Bush administration and Federal Reserve officials called in top executives of Fannie Mae and Freddie Mac on Friday and told them that the government was preparing to place the two companies under federal control, officials and company executives told the New York Times.-Reuters