A deal has been reached between United States President Barack Obama and congressional leaders on a budget plan for the rest of the fiscal year.
Without a deal, the government would have been forced to shut down.
It will reportedly cut $US39 billion from the budget over last year's levels between now and 30 September.
The top Republican in Congress John Boehner said the House would vote on a "bridge" bill to fund government operations into next week, until the deal can be readied for passage.
Had lawmakers failed to reach an agreement, the US government would have run out of funding for non-essential services.
President Barack Obama said the cuts would be difficult but necessary.
"Some of the cuts we agreed to will be painful," he said.
"Programmes people rely on will be cut back. Needed infrastructure projects will be delayed. And I would not have made these cuts in better circumstances."
He described it as "the biggest annual spending cut in history", but said America needed to start living within its means.
A BBC correspondent in Washington says Mr Obama has put a gloss on the measures, but they are a victory for the Republicans.
Announcing the deal, House Speaker Boehner said it had been a "long fight".
"We fought to keep government spending down because it really will create a better situation for job creators," he said.
Earlier, Senate Majority leader Harry Reid said both sides had agreed to the cuts but were unable to agree on federal funding for abortion.
The BBC reports that a law passed in 1870 prohibits the federal government from operating if a budget has not been passed.
The government has subsisted without a long-term budget since 1 October. It has been funded by a series of temporary measures.
Republicans in the House approved a temporary measure on Thursday, which would cut $US12 billion from spending in a single week.
However, Mr Obama said in a statement the government could not continue to operate on a week-to-week basis and that he would veto the bill.
Previous shutdowns
The federal government shut down 10 times during the Carter and Reagan administrations.
The last shutdown was in 1995 under President Bill Clinton, lasting 20 days.
