SYDNEY (AFP) - The Australian government announced Friday it would invest four billion dollars (3.32 billion US dollars) in the mortgage market in response to the global credit crunch.

Treasurer Wayne Swan said the move was very different to the US administration's planned 700 billion dollar rescue plan for the country's battered financial system.

The money, in tranches of two billion dollars each, would be invested in triple-A rated mortgage-backed securities rather than in the sort of bad-debt sub-prime mortgages which caused the problems in the US.

"This is a temporary initiative that responds to highly unusual conditions in international capital markets, and in particular their impact on Australia's mortgage lending market," Swan said.

"The actions... are about making a strong banking system even stronger and about making our banking system much more competitive," he said.

Swan and Prime Minister Kevin Rudd have assured Australians repeatedly that while not immune from fallout from the US credit crunch, the country's financial system was well equipped to cope.

The politicians were supported by a central bank stability review issued Thursday.

"The banking system is soundly capitalised, it has only limited exposure to sub-prime related assets, and it continues to record strong profitability and has low levels of problem loans," the Reserve Bank of Australia (RBA) said.

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