Washington, Aug 3 (IANS): Hours before the midnight deadline, US President Barack Obama signed into law a compromise plan to raise America's $14.3 trillion debt ceiling to avoid a catastrophic US default sending shock waves through the world economy.

The US Senate passed the plan, which imposes sweeping new spending cuts over the next decade, shortly after noon Tuesday.

The bill was approved in a 74-26 vote; 60 votes were required for passage.

The measure was approved by the House of Representatives Monday by a 269-161 vote, overcoming opposition from unhappy liberal Democrats and tea party Republicans.

Obama praised the deal moments after the Senate passed it, calling the measure "an important first step for ensuring that as a nation we live within our means."

The agreement reached Sunday by Obama and congressional leaders from both parties would keep the US out of default and reduce deficits by at least $2.1 trillion over a decade.

Whether the deal might also avert a first-ever credit downgrade for the US is not clear, since ratings agency Standard & Poor's indicated it was looking for a credible, bipartisan plan that had at least $4 trillion of debt reduction, CNN said.

The plan includes no tax or entitlement reform measures up front, although theoretically it leaves the door open to both, it said.

The framework providing for a debt ceiling increase of between $2.1 trillion and $2.4 trillion will raise the ceiling immediately by $400 billion, then by another $500 billion after September.

After deep cuts are enacted by the end of the year, it will be increased by another $1.2 trillion to $1.5 trillion. All told, the increases should cover the Treasury's borrowing needs until 2013.