President George W. Bush has announced sweeping powers to freeze the assets of international terrorists, declaring he was launching "a strike on the financial foundation of the global terror network".

US officials will freeze the assets and transactions of foreign banks that fail to co-operate in Washington's campaign to track down and seize the finances of terrorists linked to Osama bin Laden, prime suspect in September 11's attacks on the US.

The president's executive order on Monday immediately froze the US assets and transactions of 27 individuals and groups, including three relief organisations and one company.

Describing the new powers as "draconian", Mr Bush warned that international financial institutions now faced the same stark choice as foreign governments - either they co-operated with the US or their assets would be treated like any terrorist funds. "We have developed the international financial equivalent of law enforcement's most wanted list and it puts the financial world on notice," Mr Bush said. "If you do business with terrorists, if you support or sponsor them, you will not do business with the United States of America."

Mr Bush said his administration would work closely with the United Nations, the European Union and G8 group of leading industrial nations to close down terrorist finances.

He added that he expected "civilised nations" to change financial laws and regulations to pursue terrorist funds in line with the US.

Senior Treasury officials said they would immediately be calling on European governments and financial institutions that had offered to help in response to the attacks on the US. They also said they would seek to work with Swiss authorities and travel to Arab states in the Gulf region, where Mr bin Laden is believed to draw financial support.

EU officials immediately welcomed the call by Mr Bush.

The broad sanction powers represent a sea-change in the administration's approach to financial regulation and multilateral agreements. Before the terrorist attacks, the Bush administration opposed international threats to impose sanctions on tax havens that refused to share information with US officials. It was also highly critical of UN agreements on a range of issues including biological weapons.

But on Monday Mr Bush called on the Senate to ratify two UN conventions on the suppression of terrorist financing and terrorist bombings. Any action against countries that are unable to comply with the US demands will boost the movement of private banking away from secretive offshore financial centres to mainstream onshore centres with higher regulatory standards.

The Paris-based Financial Action Task Force has already named 19 centres and threatened them with sanctions if they fail to comply with international money-laundering standards.

US officials refused to provide any information on the individuals and groups whose US assets will be frozen.