Asian stock markets dived today amid the clearest signs yet of global contagion from the crisis at US mortgage giants Fannie Mae and Freddie Mac.

Banks in Japan, Taiwan and South Korea admitted they held more than $65 billion (£33 billion) in debt issued by the stricken lending giants.

Shares in the region plunged to their lowest point since October 2006, led by the banking sector.

Japan's top three banks said they held $44 billion in mortgage debts mainly from Freddie and Fannie, Taiwan's regulator said its banks had more than $20 billion exposure, while South Korea's official watchdog put its country's exposure at $550 million, with insurers particularly exposed.

Since Freddie and Fannie have always been backed by the US government, its bonds were originally sold as being almost as safe as US Treasury bonds.

But their near-collapse had shown that to be wide of the truth.

The extent of foreign ownership of their bonds is only just emerging, and it is not yet clear how exposed UK and European banks may be. Analysts highlighted the parallels with the huge global exposures to US subprime mortgage debts that saw huge writedowns.

The benchmark MSCI Asia-Pacific Index dropped nearly 3%. Leading shares in Tokyo fell 2%, Taiwan lost5% and South Korea slipped 3%.

Shares in Fannie Mae and Freddie Mac both sank in New York despite the Treasury Department rescue plan.

Billionaire investor George Soros, an increasingly bearish commentator on the turmoil, said the crisis over Fannie and Freddie would not be the last. "Freddie Mac and Fannie Mae have a solvency crisis not a liquidity crisis," said Soros.

"There's no problem in their borrowing. And in fact, insofar as there is a problem, the Fed is there to provide the liquidity." But it was "the most serious financial crisis of our lifetime".

The Wall Street Journal this morning declared Fannie and Freddie should be put into federal receivership. Its editorial said a receiver could be appointed to look after the interests of taxpayers rather than shareholders.

The receiver would run the two companies then wind them down, sell them, or at least cut them down in size.

Concern has also been growing about the wider banking industry as the bailed-out IndyMac bank reopened to Northern Rock-style queues of depositors lining up to withdraw their cash.

William Gross, chief investment officer of the giant Pimco investment fund, said there was a real fear about a host of collapses of smaller banks.

While the government had bailed out Freddie and Fannie, it was unlikely to do the same for many smaller banks, he said: "The market wonders: 'which institution is too small to bail out? Where is the dividing line?"