The US Senate has overwhelmingly passed a bill to expand a children's health care insurance scheme, setting up a policy showdown with President Bush.
Mr Bush believes the bill extends the programme too far
Mr Bush has threatened to veto the bill which he argues takes the programme beyond its original purpose of insuring children from low-income families.
The legislation would raise tobacco taxes to provide an extra $35bn (£17bn) to insure some 10 million children.
It is set to be a campaign issue in next year's elections, analysts say.
Eighteen Republican senators joined Democrats in passing the legislation by a 67-29 vote.
But the House of Representatives, which approved the bill earlier this week by 265-159, was well short of the two-thirds majority needed to override a veto.
"The president will veto this bill because it directs scarce funding to higher incomes at the expense of poor families," White House spokeswoman Dana Perino said.
The legislation renews the State Children's Health Insurance Programme (SCHIP) and increases spending from $25bn to $60bn over five years.
The extra money would come from raising taxes on tobacco products, including tax on a packet of cigarettes rising by 61 cents to $1.
Supporters of the scheme say the extra funding would increase enrolment from the current 6.6 million children to 10 million, and dramatically reduce the number of uninsured children in the US, put at about nine million.
The SCHIP was set up to help working families who could not afford private health insurance but who earned too much to qualify for Medicaid - the government health care programme for the poor.
Opponents of the legislation said the increase in funding was too large and expanded government-subsidised health care.
They also accused the legislation's backers of attempting to win political points ahead of 2008's presidential and congressional elections.
"Democrats are counting down the hours so they can tee up the election ads saying Republicans don't like kids," said Senate Minority Leader Mitch McConnell.
"Meanwhile, they're using SCHIP as a Trojan horse to sneak government-run health care into the states," the Associated Press quoted him as saying.
Sponsors of the legislation rejected criticism that it would expand coverage to families of four earning up to $83,000.
"This is not a government takeover of health care. This is not socialised or nationalised medicine or anything like that. This is not bringing the Canadian health care system to America," AP reported Republican Senator Charles Grassley as saying.