U.S. President Barack Obama said Saturday that Americans will start seeing the benefits of a new tax break by April 1.

In his weekly radio and internet address, he said the tax credit will leave a typical family with at least $65 US more every month.

Obama said the Treasury Department has begun directing employers to reduce the amount of taxes withheld from people's paycheques in accordance with the new law.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," he said.

The tax break, allowing for an annual $400 credit for individuals and $800 for couples, has been described as the costliest item in the stimulus plan.

Obama said his "Making Work Pay" tax break will affect 95 per cent of working families in the U.S.

People who do not earn enough money to owe income taxes are eligible for the credit, an attempt to offset the payroll taxes they pay.

Obama thanked legislators and others who supported his efforts to approve "the most sweeping economic recovery plan in history," referring to the $787-billion-US stimulus package he signed it into law less than one month into his presidency.

Still , he added: "It is only a first step on the road to economic recovery. And we cannot fail to complete the journey."

He said the country also must stem foreclosures, repair the banking system, get credit flowing again and revamp financial industry regulations.

With files from the Associated Press