The US Securities and Exchange Commission have said it would lift its temporary order banning short selling of financial shares next Thursday.

The SEC said it took the action after the enactment of a $US700 billion financial rescue package aimed at stabilising fragile markets.

"The Commission's emergency order that prohibits persons from selling short the securities of financial institutions will expire at 11.59pm (eastern time) on Wednesday, October 8, 2008," the statement said.

On September 19, the SEC said it took the action in concert with its British counterpart, the Financial Services Authority, which announced a wider ban on short sales.

The move covered 799 financial institutions and was made "to protect the integrity and quality of the securities market and strengthen investor confidence" amid turmoil on world financial markets.