WASHINGTON: US senators neared agreement in the small hours of Thursday to stave off a catastrophic credit default after Democrats said they were close to accepting an offer from the Republicans to raise the debt limit for two months.

Mitch McConnell, who leads the Republican opposition in the upper chamber of Congress, floated the truce as his party was set to vote against Democratic plans to hike the nation's borrowing cap until December 2022 - prompting hours of negotiations late into Wednesday night.

"We're making good progress. We're not there yet, but (we) hope we can come to agreement tomorrow morning," Schumer said after around 10 hours of talks.

Republicans have pledged not to block the revised, short-term fix, allowing Democrats to "use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels to December," according to McConnell's offer.

The deal would represent the first breakthrough in a partisan staring match that risked leaving the United States unable to service its debt after the estimated deadline of October 18, which would have shattered the US economy and led to a global recession.