P Chidambaram said the measures, which would be announced soon, would help boost the confidence of investors.

The announcement, which came just before trading began, has helped rally the stock markets.

India's benchmark Sensex fell by 16% last week and the crash also affected the rupee's value which fell to 49.3 against the US dollar on Friday.

Mr Chidambaram's words appear to have calmed the markets as the Sensex rose by 700 points in early trading on Monday.

'Watching carefully'

"We are working on more measures that will infuse liquidity, make credit intermediation smoother, and increase the confidence of depositors and investors," Mr Chidambaram told a press conference in the Indian capital, Delhi.

"We hope to be able to announce them shortly," he said.

Rising inflation erodes the value of the Indian currency and investments

Mr Chidambaram said the government, the Reserve Bank if India (RBI) and the stock market regulator were coordinating on how to deal with the volatile market.

"We are watching the situation carefully and we will respond swiftly according to the needs of the situation," he said.

"Our banks are ready and willing to provide credit," he added.

This year, Indian shares have lost nearly 50% of their value and last week was one of the worst weeks in recent years for Indian investors.

On Friday, RBI announced a cut in the cash reserve ratio for banks to 7.5% to help generate more cash in the banking system.

It said the move would make more than $12bn of credit available to the banks.

Traders said the market was responding to the global markets and the cut in the cash reserve ratio would help reduce the impact of the global crisis.

BBC