After talks ended late on Wednesday, Republicans said they had agreed as part of the deal on spending to give $18bn in funding to the International Monetary Fund in exchange for reforms in the organisation.

Republicans claimed that the IMF deal represented an "enormous victory", while Democrats were triumphant about gains in public education funding.

The annual budget should have been in place by 1 October, but Republicans, with a majority in Congress, delayed agreement on a raft of spending programmes for President Clinton's Democrat administration.

Republicans now say they have only a few details to finalise in the dispute over the $500bn bill to fund much of the US government for the rest of the fiscal year.

House Speaker Newt Gingrich told reporters: "We're very close to a deal."

But Democrats stressed that some significant disagreements remain.

IMF dispute

The long overdue $18bn funding to the IMF has been a major sticking point in the negotiations.

President Clinton urged approval of IMF funds

Although the full details have not been revealed, Republicans are saying a deal has been agreed whereby the IMF funding would be tied to certification by the US treasury secretary and Federal Reserve head that the institution was following US-backed reforms.

According to a draft of the compromise, the IMF would be forced to charge crisis-hit countries more for loans, to demand quicker repayment on some loans and to give the public and the Congress more information about its policy decisions.

House majority leader, Dick Armey, said the reforms would ensure the IMF would "never again operate in secrecy and keep people in the darkness about how they take decisions and what the decisions are and what are the impacts of those decisions."

Teacher numbers boost

Congressional leaders agreed to give President Clinton the $1.1 bn he wanted for hiring 100,000 new teachers, although Republicans won concessions that the money could also be used for special education and for teacher training.

"I am very happy the Republicans have come to our position" on education, said House Minority Leader, Dick Gephardt, a Missouri Democrat.

Remaining disputes include provisions on the environment, conducting the year 2000 population census and federal employees' health care coverage for contraceptives, according to the White House Chief of Staff, Erskine Bowles.

Friday deadline

Both sides are keen to avoid a repeat of winter 1995

A fourth temporary spending bill passed on Wednesday gives Congress negotiators until Friday to finalise the budget bills and pass them into law before the Government runs out of money.

President Clinton cut short travel plans to be in Washington for the talks, and warned Republican leaders in Congress against triggering another shutdown of government offices.

The closure of government buildings across the country during the winter of 1995-96 backfired on the Republicans who were seen to have provoked the escalation of the budget wrangling.