The US House of Representatives passed the bipartisan bill to avert a massive debt default and reduce trillions in government spending, paving way for the austerity measure to face a Senate vote.
The Budget Control Act of 2011 was passed by the House of Representatives by 269-161, a day after leaders of both the Republican and Democratic parties and the White House reached an agreement. The voting in the House was marked by the dramatic appearance of Congresswoman, Gabrielle Giffords, who survived an assassination attempt in January.
PERSPECTIVE: The US debt impasse is over, for now
Giffords voted yes for the bill, receiving a standing ovation from her colleagues in the House.
The bill is scheduled to be voted by the Senate on Tuesday.
Once passed by the Senate, it would go to the White House for US President Barack Obama to sign into law, which would prevent the government from defaulting on its debt.
The measure seeks to raise the debt ceiling from $14.3 trillion and cut deficit by $2.4 trillion over 10 years.
Following the vote, the House of Representatives went into the long summer recess and is slated to resume again in the first week of September.
"This bill is a good step, but it's just a first step in the effort to fundamentally change the way Washington does business. This does not balance the budget, but it does make it more difficult - if not impossible - to continue to increase spending," Republican Congressman Joe Barton said.
"This bill caps discretionary spending. Now we need to immediately begin efforts to reform entitlements and create enough jobs to increase revenue so that we can reduce the deficit and balance the budget - which is the true bottom line," he said.
House Democratic Whip, Steny H Hoyer, said it should not be about partisan politics and ideological extremes. "It ought to be about responsibility. It ought to be about understanding that our oath of office is to preserve and protect the United States of America. This bill does that. Vote yes," he said.