The Senate passed a short-term resolution late Friday night that would fund the federal government through April 15.
The measure, which was passed by a unanimous consent agreement, sets the wheels in motion to avert the government shutdown that was set to take place at midnight.
The Senate will now wait on the House to pass the same funding bill so it can go to President Obama for his signature.
Senate Majority Leader Harry Reid (D-Nev.) also announced an agreement that will fund the government for the six months remaining in fiscal year 2011 and cut $78.5 billion from the president's 2011 budget request.
Reid said the process had been "grueling" but that they had "not worked to this late hour for the drama, but because it's been hard."
"There have been many tough choices but tough choices are what this job is all about," said Reid. "This is historic what we have done … what we have done has been difficult but important for this country."