The US House of Representatives voted late on Tuesday night to approve a Senate last-minute deal averting a combination of wider tax rises and massive budget cuts known as the "fiscal cliff", according to RIA Novosti.

The compromise package, approved in a 257-167 vote, avoids tax increases for the US middle classes while raising tax rates on incomes of over $400,000 for individuals and $450,000 for couples.

The far-reaching deal now goes to President Barack Obama for his signature.

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The bill was approved by the US Senate on Tuesday morning following overnight talks on Monday between Vice President Joe Biden and Republican Senate leader Mitch McConnell. The Republicans agreed to allow the tax rises for the wealthiest Americans, but senators put off a final decision on a range of budget cuts worth $110 billion for two months.

The deal will have major longer-term implications for the wider world, as economists had feared the combination of budget cuts and tax hikes which were set to kick in if no deal was struck could plunge the United States into recession, dragging down other faltering economies.