President Obama is facing challenges to American power on multiple fronts as he prepares for his first trip overseas since taking office, with the nation’s economic woes emboldening allies and adversaries alike.

Prime Minister Kevin Rudd is standing by his Defence Minister, but says he is disappointed Joel Fitzgibbon failed to declare gifts he received from a Chinese-born businesswoman.

Mr Fitzgibbon last night admitted he failed to declare that Helen Liu paid for him to visit China in 2002 and 2005, and gave him a suit last year, which he later returned.

He previously said that he had only ever received small Christmas and birthday gifts from Ms Liu, who Mr Fitzgibbon says is a close family friend.

The Obama administration today formally unveiled details of its long-awaited plan to help cleanse banks and financial institutions of bad home loans and toxic securities, making a calculated gamble that partnering with private investors to buy the assets will stabilize the crisis while limiting the risk to taxpayers.