Treasury Secretary Timothy Geithner on Wednesday extended the government's $700 billion financial bailout fund to October next year, saying the economy still faced "significant challenges."

Geithner, in letters to congressional leaders, pledged to deploy no more than $550 billion from the Troubled Asset Relief Program, allowing for some of the unspent funds to reduce budget deficits.

The extension, opposed by many Republicans, will allow the Obama administration to tap the financial rescue program for further efforts to fight home foreclosures and to ease credit access for small businesses as it seeks to spur job growth.

"This extension is necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets and the needs of small businesses, and to maintain the capacity to respond to unforeseen threats," Geithner told House Speaker Nancy Pelosi and Senate Democratic leader Harry Reid. 

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