Washington was due to run out of money to operate at midnight amid a row over billions of dollars in spending cuts.
The shutdown would have seen national parks and forests closed, among other agencies.
Hundreds of thousands of government employees feared being barred from working and not being paid.
The temporary deal - a seven-day stopgap - has prevented the first US government shutdown in 15 years.
President Obama said the last-minute deal happened because "Americans of different beliefs came together."
The deadlock stemmed from a disagreement between Republicans and Democrats on the budgets for different departments, but still requires further negotiations to be finalised.
Sky News US political analyst Jon-Christopher Bua said: "President Obama had to do this deal, he had to make compromises.
"But the devil is in the detail, and this goes on for five days but, then it is back to the drawing board." Read More
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