WASHINGTON: The US Congress on Wednesday approved an 11th-hour deal to end a partial government shutdown and pull the world's biggest economy back from the brink of a historic debt default that could have threatened financial calamity.

Capping weeks of political brinkmanship that had unnerved global markets, President Barack Obama quickly signed the spending measure, which passed the Senate and House of Representatives after Republicans dropped efforts to use the legislation to force changes in his signature healthcare law.

President Barack Obama ordered all federal employees to return to work on Thursday after Congress passed a bill extending the nation's borrowing authority and ending a two-week government shutdown.

“Now that the bill has passed the United States Senate and the House of Representatives, the president plans to sign it tonight and employees should expect to return to work in the morning,” said Office of Management and Budget director Sylvia Mathews Burwell.

The US Senate and House of Representatives earlier passed legislation to end the political crisis.

The bill received 285 votes in favour of it in the House of Representatives while 144 votes were cast against the bill.

Moreover, the democratic-controlled upper chamber's bipartisan compromise won swift approval by 81 votes to 18 in the US Senate before it was sent to the House of Representatives.

The Republican leadership of the House of Representatives had begrudgingly said it would support the measure as Speaker John Boehner dropped the party's efforts to link the spending measure to changes in President Barack Obama's healthcare law.

The passage of law comes hours before the deadline to raise the $16.7tn limit.

Speaking after the Senate voted to end the fiscal impasse, but before the House of Representatives took a vote, US President Obama said the government will reopen immediately after he signs the bill, ending a 16-day shutdown.

"We can begin to lift this cloud of uncertainty and unease from our businesses and from the American people," he said.

The deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats.

It funds the government until January 15 and raises the debt ceiling until February 7, so Americans face the possibility of another government shutdown early next year.

US stocks surged, nearing an all-time high, on news of the deal.

Senate leaders had earlier announced the bipartisan deal aimed at averting a threatened US default and at reopening the federal government after a 16-day closure, a move intended to end a prolonged fiscal crisis that gripped Washington, battered Republican approval ratings and threatened the global economy with a new recession.

Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell announced a plan that would fund the government through Jan. 15 and allow the Treasury to increase the nation's borrowing authority through Feb. 7.

Obama applauded the Senate compromise and hoped to sign it into law, the White House said in statement.

US stock indexes jumped by more than 1 per cent by late morning on news of a deal.

Reid, leader of Senate Democrats, thanked McConnell for working with him to end what had become one of the nastiest partisan stand-offs in recent Washington history.

''This is a time for reconciliation,'' said Reid.

McConnell said the time had come to back away for now from Republican efforts to gut Obama's Affordable Care Act, known as Obamacare.

But the feisty minority boss said Republicans had not given up on erasing the plan from the legislative books.

The crisis began on Oct 1 with a partial shutdown of the federal government after House Republicans refused to accept a temporary funding measure unless Obama agreed to defund or delay his health care overhaul law.

It escalated when House Republicans also refused to move on needed approval for raising the amount of money the Treasury can borrow to pay US bills, raising the specter of a catastrophic default. Obama vowed repeatedly not to pay a ''ransom'' in order to get Congress to pass normally routine legislation.

The hard-right tea party faction of House Republicans, urged on by conservative Texas Republican Ted Cruz in the Senate, had seen both deadlines as weapons that could be used to gut Obama's health care overhaul, designed to provide tens of millions of uninsured Americans with coverage.

The Democrats remained united against any Republican threat to Obama's signature program, and Republicans in the House could not muster enough votes to pass their own plan to end the impasse.

Cruz said after the deal was announced that he would not block a vote. That was a key concession that signaled a strong possibility that both houses could act by day's end.

That, in turn, would allow Obama could sign the bill into law ahead of the Thursday deadline that Treasury Secretary Jacob Lew had set for action to raise the $16.7 trillion debt limit.

The Senate plan's passage in the Republican-controlled House likely will require House Speaker John Boehner put the measure to a vote as is and depend heavily on minority Democrats to support it.

The move is risky and seen as imperiling the House leadership, but Boehner was apparently ready to do it and end the crisis that has badly damaged Republican approval among voters.

Boehner and the House Republican leadership met in a different part of the Capitol to plan their next move. A spokesman, Michael Steel, said afterward that no decision had been made ''about how or when a potential Senate agreement could be voted on in the House.''

Republican Sen. Lindsey Graham said the party had hurt its cause through the long and dangerous standoff.

''This package is just a joke compared to what we could have gotten if we had a more reasonable approach,'' he told NBC.

Driving the urgency was not only the calendar but also fears that financial markets would plunge without a deal. Looking forward, lawmakers were also concerned voters would punish them in next year's congressional elections.

Polls show the public more inclined to blame Republicans.

Since the standoff began, House Republicans dropped their demands to gut the health care law.

But Congress still struggled futilely for more than two weeks to pass two measures that are normally routine: the emergency funding bill to keep the government running and legislation to raise the $16.7-trillion borrowing limit.

Investors have been nervous. The Fitch rating agency in New York warned Tuesday that it was reviewing the government's AAA credit rating for a possible downgrade, though no action was near.

The firm, one of the three leading US credit-ratings agencies, said that ''the political brinkmanship and reduced financing flexibility could increase the risk of a US default.''

The Senate deal sets a mid-December deadline for bipartisan budget negotiators to report on efforts to reach compromise on longer-term issues like spending cuts.