WASHINGTON — The Senate last night easily approved a massive plan to shore up the U.S. financial system, but the measure faces a tougher test tomorrow in the House, where leaders will try to reverse the stunning defeat the legislation suffered earlier this week.

As the Bush administration issued fresh warnings that Congress' failure to act would have dire consequences for the economy, the Senate revived the package the House defeated Monday and voted to approve it, 74-25.

The proposal — which calls for spending up to $700 billion to buy bad assets from faltering financial institutions — was heavily revised to attract wider support. The bill passed last night would extend an array of tax breaks worth $108 billion to businesses and families next year. It would also temporarily increase the limit on federal insurance for bank deposits from $100,000 to $250,000.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, acknowledged last night that it was tempting to oppose a bailout and "stick a finger in the eye of the bankers and the tycoons whose greed brought us to this crisis."

"But after the rush of righteousness fades, what then?" said Dodd, an architect of the package. "We can take a cut at Wall Street, but Wall Street won't feel the brunt of the pain."

In the final vote, 40 Democrats, 33 Republicans and independent Sen. Joe Lieberman of Connecticut voted "yes." Nine Democrats, 15 Republicans and independent Sen. Bernie Sanders of Vermont voted "no."

The provisions added to the original bill infuriated fiscally conservative Democrats in the House, who have argued for months that the tax breaks should not be extended at the expense of increasing the federal deficit. Yet some congressmen who opposed the bailout Monday were newly interested in the package yesterday.

Rep. John Shadegg, R-Ariz., an influential conservative, said the new bill was "materially better" than the one that failed in the House, sending the Dow Jones industrial average plummeting a record 777 points.

"Much as I would like to see much more dramatic changes, there comes a point in time where we've got to send the signal to the U.S. markets, U.S. consumers and world markets that we're dealing with this," Shadegg said. "I'm inclined to hold my nose and vote yes."

HUNTING FOR VOTES

House Republicans said the new package could attract as many as 100 GOP votes — enough to put it over the top if Democrats can garner as many votes as they did on Monday. House Majority Leader Steny Hoyer, D-Md., said he and other fiscal conservatives are "angry" about the addition of the tax provisions, but unlikely to abandon the package.

"Frankly, we really don't have much flexibility and this is important to do," Hoyer said.

Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday's 228-205 defeat. They were especially targeting the 133 Republicans who voted "no."

Across Washington yesterday, politicians and interest groups worked frantically to build support for the bailout, which seeks to prop up U.S. financial institutions and calm investors. President Bush and other White House officials intensified their lobbying campaign, and both presidential candidates — Sen. John McCain, R-Ariz., and Sen. Barack Obama, D-Ill. — spent at least part of the day phoning lawmakers.

Treasury Secretary Henry Paulson also worked the phones, participating in conference calls with community bankers, the American Bankers Association and small business owners affiliated with the National Federation of Independent Business. Other business groups, including the U.S. Chamber of Commerce, also joined the campaign, as did the AARP, whose members have inundated lawmakers with more than 110,000 e-mails in past days.

"People's nest eggs are disappearing," AARP President Bill Novelli said. "It's no secret that people are angry about bailing out Wall Street. But Wall Street is us. These are our stocks, our retirement funds and our futures."

HOMEOWNER DEDUCTION

House leaders, meanwhile, leaned on rank-and-file members to fall in line behind the new plan, plucking out provisions to sell to specific constituencies. Party leaders hoped to lure African American lawmakers, who voted "no" on Monday in surprisingly large numbers, with a new property tax deduction of up to $1,000 for homeowners who do not currently itemize deductions on their federal income taxes. Advocates say 30 million people would be eligible for the benefit.

The homeowners' deduction is part of a massive tax package that has been batted back and forth between the House and Senate for months and was tacked onto the bailout legislation. That package includes new tax breaks for renewable energy and a much longer list of expired tax cuts that would be extended for two years. The largest, which would be extended for one year, would restrain the growth of the alternative minimum tax, a parallel tax structure that would add thousands of dollars to the tax bills of more than 20 million families next year without congressional action.

The tax package also would extend federal deductions for sales taxes in states that do not levy an income tax, as well as for tuition and for teachers who spend their own money on classroom supplies. There are also tax breaks worth nearly $40 billion for businesses over the next 10 years, including incentives for conducting research and development domestically, for opening new restaurants and for doing business in Washington D.C.

The package also contains nearly $9 billion for disaster relief over the next 10 years, and $3.3 billion over the next decade for rural schools.

$110B OVER DECADE

The cost of the package would be offset somewhat by new taxes on hedge-fund managers who avoid taxes by transferring income offshore, a provision that would raise $25 billion over 10 years, as well as a new reporting requirement for stock brokers that would make it easier to tax capital gains on stock sales. But that would come nowhere near covering the cost of the package, which the Joint Committee on Taxation yesterday estimated at $110 billion over the next decade.

The new measure was assembled behind closed doors on Tuesday. In an unusual bipartisan power play, Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., collaborated to produce a package that could easily pass the Senate and build momentum in the more reluctant House.

Negotiators said Obama played a minor but important role in courting Democratic holdouts, contacting individual lawmakers from the campaign trail. He also announced his support for an increase in the FDIC insurance limit; McCain did so as well, but an hour after Obama.

During Senate debate yesterday, Obama echoed Franklin D. Roosevelt's first fireside chat to the nation during the Great Depression, calling on the American people to have "confidence and courage" through what is likely to be an extended period of economic turmoil.

"This is not just a Wall Street crisis. It's an American crisis," Obama said. "Passing this bill can't be the end of our efforts to support the economy; it must be the beginning."

McCain was elsewhere in the Capitol and did not speak during the debate. He later supported the measure.

Post writers Jonathan Weisman and Dan Eggen and The Associated Press contributed to this report.