US President Barack Obama is urging lawmakers to quickly forge a deal to keep the country from plunging into debt default, saying he is 'willing to compromise'.

Mr Obama warned of economic 'Armageddon' should Congress fail to raise the debt limit to allow more US borrowing, with his administration highlighting disastrous ripple effects that would churn through the global financial system.

He implored fellow Democrats and opposition Republicans to embrace 'shared sacrifice' to help break the stalemate that has led ratings agencies and top US lender China to sound the alarm over US creditworthiness.

On Friday, he said he had given top lawmakers 24 to 36 hours to talk to their rank and file and return to him with a viable plan. That time window ended midday Saturday.

At the time he called for a 'grand bargain' which would cut domestic entitlement programmes dear to Democrats.

However he also insisted on 'cutting out certain tax breaks and deductions for the wealthiest Americans,' a proposal Republicans have flatly rejected.

The US government reached its debt limit of $14.29 trillion in May, and since then the Treasury Department has used special measures to allow the government to keep paying its bills.

However the Treasury said that unless the limit is raised by 2 August the country's spending and debt commitments could force a default.

That could mean the US could fail to pay 'entitlements' such as Social Security and Medicare, and fail to make interest payments on bonds.

Separately US Senators are making advances on a bipartisan plan that could avert a debt default by the country.

The package would see $1.5 trillion in spending cuts being made over a decade and would be accompanied by the setting up of a powerful committee charged with producing a comprehensive debt reduction plan.