Sept. 18 (Bloomberg) -- The U.S. Treasury said it will sell an additional $100 billion in short-term debt to aid the Federal Reserve's balance sheet, amid the biggest extension of central- bank credit to financial companies since the Great Depression.

The Treasury today announced plans to sell $30 billion in 59-day bills at 11:30 a.m. tomorrow, $30 billion in 45-day bills at 1 p.m. tomorrow and $40 billion in seven-day bills on at 11:30 a.m. on Sept. 24.

Yesterday the Treasury started a special program to help finance the Fed's portfolio with an initial $100 billion in bill auctions. The proceeds will give the central bank cash to boost liquidity in credit markets struggling from $519 billion in writedowns and losses since the start of last year.

The new bill sales ``are intended to give the Fed the ability to liquefy the financial markets,'' said Ward McCarthy of Stone and McCarthy Research Associates in Skillman, New Jersey.

At about 8 a.m. London time, the Fed announced a $180 billion swap line in collaboration with other central banks, the latest addition to a series of Fed-backed emergency credit facilities. This new facility ``will take up all of the extra balance sheet space created by the first wave of the Treasury's cash infusion announced yesterday,'' said Wrightson ICAP chief economist Lou Crandall in a note to clients today.

The expansion of the Treasury's bill program may increase calls for other ways to expand the Fed's portfolio. One proposal put forth by Fed Chairman Ben S. Bernanke would allow the Fed to pay interest on reserves deposited by commercial banks, enabling the central bank to expand its balance sheet without affecting monetary policy.

Congress' Role

The payments would help officials push money into the banking system without influencing the main policy rate, by giving lenders an incentive to leave funds with the Fed. Congress already passed a law giving the central bank the authority, starting in October 2011, and Bernanke has called for it to be effective immediately.

``Congress better authorize the payment of interest on reserves quickly, because the Fed's balance sheet management challenges keep growing,'' Crandall said.

For now, the Treasury is using special bill auctions to help the Fed add to its portfolio. An initial auction of $40 billion in 35-day bills was held yesterday; today the Treasury is selling $30 billion in 20-day bills and $30 billion in 76-day bills in a pair of auctions.

All of the supplementary bill auctions announced so far settle on the day after the sale.

Separately, as part of its regular borrowing calendar, the Treasury today announced plans to auction $27 billion in three- month bills and $27 billion in six-month bills at its next weekly sale Sept. 22. The department also said it will auction $20 billion in 52-week bills on Sept. 23.

Treasury spokeswoman Jennifer Zuccarelli declined to comment about the auctions for the Fed.

To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.netJohn Brinsley in Washington at jbrinsley@bloomberg.net

Last Updated: September 18, 2008 12:17 EDT