Republican presidential candidate John McCain announced Wednesday that he is suspending his campaign to return to Washington and focus on the "historic" crisis facing the U.S. economy.
The Arizona senator called on his Democratic rival, Barack Obama, to do the same.
The Obama campaign announced that Obama would make a statement shortly.
McCain also urged that organizers of Friday's presidential debate at the University of Mississippi to postpone the event.
"I am calling on the president to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself," McCain told reporters in New York. "It is time for both parties to come together to solve this problem." Watch McCain's announcement »
Senate Majority Leader Harry Reid issued a statement saying the presidential debate should go on and that McCain's negotions should not be a "photo op."
"It would not be helpful at this time to have them come back during these negotiations and risk injecting presidential politics into this process or distract important talks about the future of our nation's economy," the statement said. "We need leadership, not a campaign photo op."
"If there were ever a time for both candidates to hold a debate before the American people about this serious challenge, it is now," he added.
McCain senior adviser Mark Salter briefed reporters shortly after. He said the campaign will suspend airing all ads and all campaign events pending Obama's agreement.
Salter also set McCain called President Bush and talked to colleagues in Washington and learned that passage of the Paulson plan was next to impossible to be passed.
McCain would partake in debate if they passed agreement by Friday morning, Salter added.
McCain's campaign also said that he had canceled his scheduled appearance on "The Late Show with David Letterman" for Wednesday night.
The announcement came just hours before President Bush was scheduled to address the nation on the troubled state of the U.S. financial system -- a problem for which his administration has proposed a $700 billion bailout.
Immediately after the announcement, White House press secretary Dana Perino released this statement: "We welcome Sen. McCain's announcement. We are making progress in negotiations on the financial markets rescue legislation, but we have not finished it yet. Bipartisan support from Sens. McCain and Obama would be helpful in driving to a conclusion."
A McCain senior adviser said that Obama called McCain early Wednesday morning to asking a joint statement of "shared principles and conditions" for the bailout proposal.
An Obama campaign source confirmed the call and said that McCain returned his call six hours later, and accepted the concept and suggested the two of them return to Washington to join the negotiations. The source says that Obama told him that he would do that only if negotiators saw it as useful.
According to the Obama source, soon after they ended the call, McCain announced he was suspending his campaign and returning to Washington.
The bailout plan has met with a cool reception in two days of hearings on Capitol Hill, where both Democrats and Republicans have expressed skepticism about the proposal drafted by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson.
"It has become clear that no consensus has developed to support the administration's proposal," McCain said. "I do not believe that the plan on the table will pass as it currently stands, and we are running out of time."
But he added that he believes Congress could forge a consensus on legislation "before the markets open on Monday."
McCain and his running mate, Alaska Gov. Sarah Palin, were in New York to meet with world leaders at the United Nations. They had met with Georgian President Mikheil Saakashvili and Ukrainian President Viktor Yushchenko.
"Senator, governor, I'm really honored to be here with you. I know you have a very important campaign to run," Saakashvili said. "Overall, I have to say I greatly appreciate the solidarity we felt from the American people."
Earlier, Palin met with Iraqi President Jalal Talabani.
Obama on Wednesday lashed out at the Bush administration and his opponent on the handling of the crisis on Wall Street as well as the $700 billion bailout plan by Treasury Secretary Hank Paulson.
Congress and the White House are trying to negotiate the details of what would be the most sweeping economic intervention by the government since the Great Depression. Bush has asked Congress to act quickly on the bailout proposal following news of failing financial institutions and frozen credit markets.
"The clock is ticking on this crisis. We have to act swiftly, but we also have to get it right," Obama said in Dunedin, Florida. "And that means everyone -- Republicans and Democrats, and the White House and Congress -- must work together to come up with a solution that protects American taxpayers and our economy without rewarding those whose greed helped get us into this problem in the first place."
Obama said it's unacceptable to expect the American people to "hand this administration or any administration a $700 billion check with no conditions and no oversight when a lack of oversight in Washington and on Wall Street is exactly what got us into this mess."
He said struggling homeowners must be taken care of in any economic recovery plan -- and that taxpayers should "not be spending one dime to reward the same Wall Street CEOs whose greed and irresponsibility got us into this mess." Read more on both candidates' recovery plans
He also hit McCain for switching from his stance as an advocate for market deregulation to a strong supporter of regulation since the Wall Street crisis became front-page news.
"He's suddenly a hard-charging populist," Obama said. "And that's all well and good, but I sure wish he was talking the same way over a year ago, when I introduced a bill that would've helped stop the multimillion-dollar bonus packages that CEOs grab on their way out the door."
McCain's bombshell comes as a new CNN "poll of polls" out of Virginia on Wednesday shows McCain with the slimmest of leads in a state that traditionally has been a safe bet for Republicans.
The latest polls could be a warning sign for McCain that he still has work to do to lock down certain states where previous GOP nominees had to spend little time or effort doing so.
In the new poll of polls, McCain holds a 1 percentage point lead over Obama (47 percent to 46 percent) in Virginia, while 7 percent remain undecided.
The poll of polls is an average of three recent surveys of the state -- MSNBC/Mason-Dixon (September 17-22), ARG (September 17-20) and ABC/The Washington Post (September 18-21). The poll of polls does not have a sampling error.