The unfolding Enron tragedy has made it clear that under the present system, money talks and public interest walks

Representative Martin T Meehan, co-sponsor of the bill

Unions, corporations and non-profit groups would also be banned from broadcasting adverts which mention candidates 60 days before an election. Many of these so-called issue ads are often designed to influence the way Americans vote.

Estimates say that on average 50% of soft money was spent on issue adverts during the last election.

The limit for hard money would be raised from $1,000 to $2,000 for both House and Senate candidates.

Why are the reforms necessary?

Supporters of the bill said it was needed to restore some faith in the integrity of American politics - particularly in the wake of the collapse of the energy giant Enron.

The bill had been languishing in the House of Representatives for nearly a year but gathered new momentum after the Enron scandal drew public attention to massive injections of corporate cash into the political system.

The approval paves the way for the most significant changes in election funding since the Watergate scandal in the 1970s.

Has there been any opposition to the bill?

Republican leaders have argued that it was stacked against their party and also unconstitutional.

They said the soft money ban would hamper national political parties and that the restrictions on broadcast adverts would unconstitutionally limit free speech.

Opponents of the bill also argued that it contained numerous loopholes that would allow continued soft-money fund-raising and create a stampede to raise soft money before the new regulations take effect.

The new law would become active in 2003, leaving this autumn's congressional elections under current rules.

How big are the sums of money involved?

Typically, soft money donations are five- and six-figure sums. In the last election cycle, the two major parties gathered nearly $500m in soft money. Enron gave an estimated $1.7m of it.

According to the Centre for Responsive Politics, Enron contributed more than $5.9m to federal candidates and the Democratic and Republican parties since 1989.

In 2001, Republicans raised nearly $172m in soft money compared with the Democrat's $68m.

It is estimated that unregulated donations grew from $86m in the 1992 presidential election to $500m in the 2000 election.