The US Senate overwhelmingly approved a deal on Wednesday to end a political crisis that partially shut down the federal government and brought the world's biggest economy to the edge of a debt default that could have threatened financial calamity.

The House of Representatives quickly convened and was expected to follow suit after Republicans dropped their bid to link the spending measure to changes in President Barack Obama's healthcare law.

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

Both the Democrat-controlled Senate and Republican-controlled House of Representatives must approve the plan, which President Barack Obama would then sign before Thursday's deadline for Congress to increase the federal debt limit.

Obama applauded the Senate compromise and hoped to sign it into law, White House Jay Carney spokesman said.

And Speaker John Boehner said he would bring the Senate measure to the floor of the House of Representatives for a vote.

But he did not move to that position quietly, saying Republicans were not giving up on the fight to bring down US debt and cripple the president's signature health care overhaul.

"Our drive to stop the train wreck that is the president's health care law will continue," Boehner said in a statement.

Refusing a 'ransom'

With the deal announced, US stock indexes jumped by more than one percent in trading late in the day.

Reid thanked McConnell for working with him to end what had become one of the nastiest partisan battles in recent Washington history. "This is a time for reconciliation," he said.

A long line of polls charted a steep decline in public approval for Republicans, who were left with little to show for their fight; in political terms, the final agreement was almost entirely along lines Obama had set when the impasse began last month.

The crisis began on October 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 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 Affordable Care Act, designed to provide tens of millions of uninsured Americans with coverage.

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