US debt crisis over, House endorses deal UPDATED

A potentially crippling US debt default has been averted with Congress passing legislation to end a two-week political standoff.

The impasse rocked financial markets, splintered the Republican Party and showcased Washington dysfunction.

The House voted 285-144 for the bill to reopen the government through to January 15, effectively suspend the debt ceiling through to February 7 and lay the groundwork for talks over broader budget issues.

President Barack Obama is expected to sign the bill promptly, ending a partial government shutdown that saw more than 800,000 federal workers furloughed and government services across the country curtailed.

Earlier report:
The US Senate has voted 81-18 for a bipartisan deal that raises the nation's borrowing limit, fully reopens the federal government and move closer to resolution the weeks-long budget drama,

The 11th-hour agreement, approved on a solid bipartisan vote, diminishes the threat of a US debt default by allowing the government to continue borrowing money through to February 7, 2014.

It also reopens the partially closed government through to January 15, ending a shutdown that began 16 days ago because of the impasse over spending and the 2010 healthcare law.

The plan was approved with the help of 27 Republicans, who joined all 54 members of the Democratic caucus to support the bill. All the no votes were Republicans. Only one sick Senator didn't vote.

Financial markets rallied in relief at the deal, which will end uncertainty about whether the US would be forced into an historic default on its debt.

Stocks on Wall Street rallied with the Dow Jones Industrial Average closing 205.82 points, or 1.4%, up at 15,373.83.

The stock market has seen big swings in recent days as the wrangle to resolve the debt impasse continued. Today's gains more than erase the Dow's 133-point decline on Tuesday, when negotiations between congressional leaders stalled.

Earlier report:
"The compromise we reached will provide our economy with the stability it desperately needs," Senate Majority Leader Harry Reid said on the Senate floor.

Senate Republican Leader Mitch McConnell says he’s confident the deal will end the budget stalemate.

Lawmakers are hopeful both the House and Senate will vote by the end of the day.