WASHINGTON (AP) — The value of loans held by the 21 largest institutions getting support from the government's $700 billion bailout fund fell in April, the fifth decline in six months.

The Treasury Department's monthly report of lending activity yesterday showed that average loan balances at the 21 institutions totalled $4.34 trillion in April, down 0.8 percent from March.

The administration says the declines in recent months would have been even more severe without the government support.

The survey's consumer lending category — total outstanding loans in first lien mortgages, home equity lines of credit, credit card loans and the category that is other consumer loans — dropped one percent in April.

"Households are facing growing pressures from a weakening labour market and further declines in their wealth," the report said. "In this context, consumers focused on paying down debt, driving the decreases in outstanding loan balances held by banks."

Still, the report noted that job losses in April and May averaged 425,000, compared with an average of nearly 700,000 during the first three months of this year. Single-family housing construction and home sales also have stabilised since January.

But despite various signs of improvement, other indicators showed worsening of conditions, including home foreclosures and delinquencies setting another record in the first quarter with more than nine percent of all mortgages at least 30 days delinquent.

Ten of the nation's biggest financial companies — including JPMorgan Chase & Co., American Express Co. and Goldman Sachs Group Inc. — last week got the go-ahead to return $68 billion in federal bailout money, a development viewed as evidence that the financial sector was beginning to stabilise.

The report said the large banks also reported that demand by businesses for commercial and industrial loans was well below normal levels amid the recession.

"As firms continue to downsize, cut costs and reduce inventories, banks anticipate that lower levels of demand for C&I loans will persist through the second quarter of 2009," Treasury said.

The survey also found poor market conditions and general caution by businesses in the area of commercial real estate loans.

The government has argued that the $700 billion financial rescue fund Congress created last October was needed to bolster banks' tattered balance sheets and encourage them to boost lending to consumers and businesses.

Critics, however, have argued that the government has not done enough to ensure that the money banks were receiving was being used to boost loan activity.

The big banks included in the US Treasury's monthly loan survey account for more than half of the net loans outstanding at financial institutions.

The government has provided nearly $200 billion to support 623 banks in 48 states, Puerto Rico and the District of Columbia since the programme began.