The leader of the centre-right Republican Party in the US House of Representatives has performed a u-turn and backed a short-term deal to extend tax cuts for 160 million Americans.
House speaker John Boehner said that he would now agree to a Democrat proposal to extend the cuts until the end of February.
“We will ask the House and Senate to approve this agreement by unanimous consent before Christmas. Middle class families and small businesses are struggling and they are making sacrifices, and I think this agreement will help our economy,” he told reporters on Thursday.
A vote will be held in both the lower and upper houses later on Friday.
It marks a victory for President Barack Obama, whose Democratic Party had accused Republicans of only backing tax cuts for the very wealthy.
The tax cuts will cost the US Treasury more than 90 billion euros.
They mean that each American worker will keep an extra $1,000 extra on average on their pay cheques each month.