The Federal Reserve said Tuesday it would begin buying mortgage-backed securities in early January under a previously announced plan to purchase up to 600 billion dollars of these assets.

The program was announced in late November as another step in fighting a credit crunch stemming from the collapse in housing that has now engulfed the financial sector and is choking economic activity.

"The program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally," the Fed said in a statement.

The New York Fed, which will carry out the purchases, said it had selected four investment managers for the program: BlackRock, Goldman Sachs, PIMCO and Wellington Management Company.

"The selection criteria were based on the institution's operational capacity, size, overall experience in the MBS (mortgage-backed securities) market and a competitive fee structure," the New York Fed said.

The contract for a custodian has not yet been awarded.

The central bank has already begun purchasing up to 100 billion dollars in mortgage-backed securities on its own and will buy up to 500 billion more through these investment firms.

"Investment managers will employ a passive buy-and-hold investment strategy in accordance with investment guidelines prescribed by the Federal Reserve," the New York Fed statement said.

The new efforts are part of a move to restart consumer credit markets that froze up in October and to get more liquidity and bring down borrowing costs for the housing market, which is at the center of the economic storm.

The program will buy up troubled assets from Fannie Mae and Freddie Mac, two major government-sponsored enterprises that were taken over by the Treasury earlier this year to avert collapse, and of securities backed by Ginnie Mae, a guarantor of mortgage debt.

The central bank is taking over the purchases of troubled mortgage debt, which originally had been intended under the Treasury's 700-billion-dollar rescue approved by Congress known as the Troubled Asset Relief Program.

The Fed has also announced a program to buy up to 200 billion dollars in asset-backed securities -- backed by student loans, auto loans, credit card loans, and other loans -- in a further effort to unclog frozen credit markets.