President Barack Obama on Monday said Republican and Democrat leaders have struck a deal to raise the US debt limit.
Under the proposal, which is set for debate and votes in Congress on Monday, the US debt ceiling would rise by up to $2.4 trillion from the current $14.3 trillion.
The US government deficit will be cut by a similar amount over 10 years, and a special bipartisan committee will also be set up to agree spending cuts.
Without a deal the US would face the prospect of defaulting on its debts.
Party leaders in the House of Representatives and Senate still have to present the deal to their members on Monday, before the package goes to a vote.
The House could begin voting on the agreement from around midday local time, with the Senate working to a later timetable, the Washington Post reports.
The BBC’s Jane O’Brien says the package is still likely to be a tough sell, with some Republicans and Democrats in the House remaining opposed to different aspects.
A number of conservative Republicans, including first-time congressmen, are likely to vote against the plan, while some liberals in the Democratic party will be disappointed by the prospect of cuts to benefits.
But Democratic House leader Nancy Pelosi is expected to ensure enough Democrats vote for the bill to help smooth its passage, analysts say.
The US faces a Tuesday deadline to raise its $14.3 trillion debt limit or risk the first full-scale default in its history, a possibility that has spread mounting unease through international markets.
Speaking on Sunday night, the US president said it was not the deal he would have preferred, but noted that the compromise plan would make a “serious down payment” on the US deficit.
“I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy,” Mr Obama said.