President Obama said that progress had been made after night-time talks with congressional leaders.

He said he was not prepared to express "wild optimism" but hoped to be able to announce a deal on April 8.

Without a deal, the law funding most of the US government will expire at midnight on April 8, forcing a shutdown.

Some 800,000 government employees would be barred from working and would not be paid, government lending would cease, and national parks and other government-run sites would close.

The US military would continue to operate, but troops would not be paid until the deadlock was broken.

The last US government shutdown came in 1995, amid dispute between the Republican Congress and Bill Clinton's White House.

That shutdown lasted for 20 days and was estimated to have shaved a full percentage point off US economic growth for one quarter of the year.