Story highlights White House officials were warned about the benefit issue, an official says

Defense Department makes a deal with Fisher House Foundation to pay benefits

The government will reimburse the foundation when the government reopens

The news was devastating for Shannon and Jeremiah Collins: Their 19-year-old son, Marine Lance Cpl. Jeremiah Collins Jr., died in Afghanistan's Helmand province.

Then it got worse.

The Milwaukee, Wisconsin, couple learned the survivor benefit paid to the families of fallen troops for burial and other expenses had been suspended because of the government shutdown.

Her sadness, Shannon Collins says, was compounded by worry and questions about how to pay off the debt.

It's a question that embarrassed and outraged government officials, who scrambled to find a way to provide the survivor benefits to the families of 26 troops who have died since the shutdown began on October 1.

On Wednesday, the Pentagon struck a deal with a private charity to ensure families of fallen troops are paid the survivor benefits, which include a $100,000 payment made within days of the death, Defense Secretary Chuck Hagel said.

The government will reimburse the Maryland-based Fisher House Foundation once the shutdown is over, Hagel said in a written statement.

"I am offended, outraged, and embarrassed that the government shutdown had prevented the Department of Defense from fulfilling this most sacred responsibility in a timely manner," Hagel said.

"In the days before the shutdown, we warned Congress and the American people that (the Defense Department) would not have the legal authority to make these payments during a lapse in appropriations."

The announcement came just after the U.S. House voted unanimously to resume paying survivor benefits.

It was unclear whether the U.S. Senate would take up the bill, given that a legislative fix may now not be necessary.

President Barack Obama ordered administration officials on Wednesday to find an immediate solution.

"The president was very disturbed to learn of this problem, and he directed the Department of Defense to work with the Office of Management and Budget and his lawyers to develop a possible solution, and he expects this to be fixed today," White House spokesman Jay Carney said.

The survivors benefit includes funeral and burial reimbursements. It also includes a gratuity for travel to funeral or memorial services -- or to be at Dover Air Force Base, where remains of those troops who died overseas typically go.

As the debate swirled around how to restore the military death benefits, Hagel traveled to Dover for the arrival of the bodies of four soldiers killed Sunday when insurgents attacked their unit with a improvised explosive device in Afghanistan's Zahir District.

The four are Pfc. Cody J. Patterson, 24, of Philomath, Oregon; 1st Lt. Jennifer M. Moreno, 25, of San Diego, California; Sgt. Patrick C. Hawkins, 25, of Carlisle, Pennsylvania; and Sgt. Joseph M. Peters, 24, of Springfield, Missouri.

It is rare for the defense secretary to attend a ceremony for the return of the soldiers, but Hagel's appearance appeared to send a strong message about the government shutdown.

Carney said the payments were not specifically addressed in legislation to ensure military personnel would be paid during any shutdown. He did not elaborate on what the solution might be.

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It's unclear exactly when Obama learned of the situation, which reporters were briefed about four days before the shutdown began. At the briefing Wednesday, Carney refused to say when the president learned benefits were being delayed.

"I don't know specifically," he said.

A senior Defense Department official, speaking on condition of anonymity, told CNN that Hagel warned senior White House officials and some in Congress days ago -- before the shutdown began -- that death benefits would not be paid families of fallen troops during the shutdown.

On September 27, Pentagon comptroller Bob Hale told reporters at a Pentagon briefing that death gratuities would be one of the things held up by a shutdown.

"This is ghoulish, but it's the law, not policy," he said. "Remember that. If the death occurred after the lapse took place, then the money would be obligated after the lapse took place, and we would have no authority to pay based on that money until the lapse ended. So in that case, they could be delayed."

It's the "worst nightmare" for military families, said Amy Neiberger-Miller of TAPS, a support network for families of the fallen.

Before the Pentagon worked out a deal, Fisher House Foundation -- a group that helps the families of troops in need -- offered an advance grant to families of the fallen during the shutdown, according to a letter sent Tuesday from Sen. Joe Manchin, D-West Virginia, to Hagel.

Even as the Defense Department entered into a contract Wednesday with Fisher House, both sides in Washington were blaming the other. The holdup on death benefit payments is just one issue affecting military families because of the shutdown.

Child-care programs have been scratched, subsidized military grocery stores are closed, nonessential medical care has been cut back, and kids' sports programs have been canceled, CNNMoney reports

"The president is the commander in chief. He should not be using troops and their families as pawns in this political bickering," Rep. Joe Pitts, R-Pennsylvania, said on the House floor. "He should be doing everything he can to stand up for the men and women of our military. Instead, he is refusing to negotiate until he gets his way."

Sen. John McCain, R-Arizona, said: "Shouldn't we be embarrassed about this? Shouldn't we be ashamed?"

"The electricity, the hot water, the towels -- they are not provided by gym fairies," Rep. Earl Blumenauer, D-Oregon, said Wednesday, calling, on the House floor, for the gym to be closed. "They are provided by taxpayers."

"Some of the most fanatic about inflicting unnecessary pain on the American public are regulars, enjoying our House gym while the staff gym is closed," he said.