US House of Representatives pass debt deal

The US Congress has approved a rare tax increase that will hit the nation's wealthiest households in a bipartisan budget deal

By a vote of 257 to 167, the Republican-controlled House of Representatives approved a bill that fulfills US President Barack Obama's promise to raise taxes on top earners.

The Senate passed the measure earlier in a rare New Year's Day session and Mr Obama is expected to sign it into law shortly.

Under the deal, the US will no longer go over a so-called "fiscal cliff" of tax hikes and spending cuts that had been due to come into force

But other bruising budget battles lie ahead in the next two months.

Speaking after the House of Representatives passed the deal, Mr Obama said more work lies ahead for the country:

"I think we will recognise this law is just one step in the broader effort to strengthen our economy and broaden our opportunities for everybody. The fact is the deficit is still too high and we are still investing too little in the things we need for the economy to grow as fast as they should."

Strictly speaking, the US went over the cliff in the first minutes of the New Year because Congress failed to act on time.

But the bill just passed will be backdated.