US President George W Bush has signed a bill to raise the national debt ceiling to nearly $9 trillion (£5.12 trillion).
The bill means the government can borrow a further $781bn and stops what would have been a first ever default of Treasury notes.
In addition, it permits the US to pay for the war in Iraq without increasing taxes or making domestic cuts.
The debt increase, the fourth since Mr Bush came to power, comes as the budget deficit reaches near record levels.
An additional increase in the debt limit next year is likely, the Associated Press news agency said.
The latest measure enables the debt limit to increase to $8.96 trillion from its previous level of $8.18 trillion.
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