WASHINGTON — The government extended a new multibillion-dollar lifeline to one of the country's biggest banks as officials continue to struggle with a serious crisis in the financial system.

After a marathon negotiating session, the Bush administration agreed early today to provide Bank of America with an additional $20 billion in support from the government's $700 billion financial rescue fund. Bank of America agreed to pay a dividend on the cash injection and will accept more restrictions on executive pay.

The administration, the Federal Reserve and Federal Deposit Insurance also agreed to participate in a program to provide guarantees against losses on about $118 billion in loans and securities backed by residential and commercial real estate loans.

The bulk of these holdings were assumed by Bank of America when it acquired Merrill Lynch.

Bank of America had already been granted $25 billion from the bailout fund that Congress passed on Oct. 3, but found it needed more as it sought to cope with rising losses related to its acquisition of Merrill Lynch.

Bank of America agreed to pay the government an 8 percent dividend on the $20 billion capital injection. It also agreed to comply with enhanced restrictions on executive pay and benefits and implement an expanded program to modify mortgages in an effort to avoid rising foreclosures.

The company also agreed to reduce its dividend to a penny per share for three years.

By The Associated Press