The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.

The government has put $111bn of public money into the companies since taking them over and the awards go against moves to curb lavish pay packages.

But the regulator which decided the pay levels said the awards were 40% lower than before the government bailout.

The sums involved reflected the need to attract and retain talent, it argued.

In another development, the Obama administration announced it was removing the $400bn financial cap it will provide to the two companies to keep them from failing.

Treasury department officials said the cap would be replaced with a flexible formula to ensure the companies could stand behind the billions of dollars in mortgage-backed securities they sell to investors.