Republicans led by House Speaker John Boehner earlier pressed for $61bn in cuts The US Congress is set to approve a budget that would cut $38.5bn (£23.6bn) from last year’s spending levels in the remainder of the fiscal year.
The deal was agreed on Friday, six months after the last budget expired.
With its passage, Republicans and Democrats in Congress will turn their attention to what is expected to be a bitter fight over next year’s budget.
Republicans have pushed for greater spending cuts than Democrats have been willing to concede.
The bill, which is expected to pass both houses of Congress on Thursday and be signed by Mr Obama immediately afterwards, was crafted after weeks of fraught negotiations between the White House and congressional Democrats and Republicans.
The ballooning US deficit is forecast to reach $1.5 trillion (£921bn) this year.
It is set to be a top issue in the 2012 election campaign, with Democrats and Republicans offering voters starkly contrasting visions about how to close it.
The bill expected to pass on Thursday, which covers the fiscal year up to 30 September, slashes some domestic spending but also relies on accounting changes that some economists say create the illusion of deeper spending cuts.
Though Republican negotiators led by Speaker John Boehner in the House of Representatives initially pressed for $61bn in budget cuts, many analysts in Washington have scored the budget bill as a victory for the Republicans.
The debate over the budget for the fiscal year 2012, which begins on 1 October, has already begun in earnest.
Last week, Republican House budget committee chairman Paul Ryan introduced a budget proposal that would slash $6.2 trillion in government spending over the next decade.
It would achieve those cuts in large part by requiring the elderly to pay more for their healthcare than they do currently and cutting healthcare and social programmes for the poor.
Meanwhile, it would lower taxes for the wealthy, a move conservatives say will boost US economic growth.
On Wednesday, US President Barack Obama laid out his own fiscal policy plan, proposing a mix of tax increases for the wealthy and changes to social programmes, while rejecting the fundamental revisions Republicans proposed.
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