The Federal Reserve ramped up its aid to the beleaguered US economy on Wednesday, launching an effort to put more downward pressure on long-term interest rates over time and help the battered housing sector.

The Fed said it would launch a $400bn program that will tilt its $2.85tn balance sheet more heavily towards longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated treasuries – a strategy dubbed "Operation Twist", from the card game pontoon.

It will also reinvest proceeds from maturing mortgage and agency bonds back into the mortgage market, an acknowledgement of just how weak conditions in the sector have remained.

"Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated," the Fed said in its statement.

Faced with a lofty 9.1% jobless rate, consumer and business confidence sapped by a troubling US credit downgrade, and an escalating sovereign debt crisis in Europe, Fed officials have signalled they would seek to prevent already sluggish US growth from weakening further.

But although the Fed chairman, Ben Bernanke, has indicated the central bank's reluctance to stay on the sidelines, Fed activism has become a punching bag for politicians as an election year nears.

Republican congressional leaders wrote to Bernanke this week urging the central bank to desist from further economic interventions, echoing criticism voiced by Republican presidential candidates in recent weeks.

Fed officials, however, believe that by shifting their bond holdings they could encourage mortgage refinancing and push investors into riskier assets, such as corporate bonds and stocks, without stoking a run-up in consumer prices.

The US central bank is not alone in its concerns. The Bank of England on Wednesday signalled it was ready to pump more money into the weakening British economy, potentially as soon as October.

Similarly, the Norwegian central bank held its main interest rate unchanged and signalled it might refrain from rate increases for longer than previously expected owing to a weaker global economy and the euro zone debt crisis.

The US economy grew at less than a 1% annual rate over the first half of the year, and analysts have warned of a heightened risk of recession. A report showing US employers added no new jobs in August provoked widespread fears growth could stall.

The Fed has already embarked far down one of the most aggressive monetary easing paths on record. It cut overnight interest rates to near zero in December 2008 and then moved to more than triple its balance sheet to $2.8tn through a series of bond purchases.

After its last meeting on 9 August, the Fed said it expected to hold rates at rock-bottom levels at least through the middle of 2013, a decision that drew three dissenting votes.