A budget deal reached by a bipartisan committee of legislators would avert another government shutdown for two years, lawmakers said on Tuesday as they revealed an agreement that would also replace across-the-board spending cuts.

“We have broken through the partisanship and the gridlock and have reached a bipartisan agreement that will prevent a government shutdown in January,” Democratic Senator Patty Murray said.

Failure to come to an agreement on a budget earlier this year had caused much of the government to shut down for 16 days in October, halting services and fuelling economic uncertainty.

Republican Congressman Paul Ryan called the budget “a clear improvement on the status quo,” while acknowledging it did not achieve all that conservatives might hope for in reducing government spending. Murray noted that Democrats would be disappointed by the lack of tax increases, but both lawmakers agreed on the need to focus on areas of agreement.

The budget must still be passed by the Republican-controlled House of Representatives and Democratic-controlled Senate before going to the White House for President Barack Obama’s signature. It will replace defence spending cuts due to take effect in January with more targeted decreases in other spending.

Some members of the centre-right Republican Party have expressed reservations about the agreement, but Ryan urged them to back the measure.

Obama welcomed the breakthrough as “a good first step.” He praised it for replacing sequesters cuts that harmed students, seniors and families and hurt the economy, for striking a “balanced” approach and for reducing deficits.

“Because it’s the first budget that leaders of both parties have agreed to in a few years, the American people should not have to endure the pain of another government shutdown for the next two years,” he said.

The proposal sets non-defence discretionary spending at just over $1 trillion for the 2014 and 2015 budget years. Much of government spending is consumed by other non-discretionary spending, such as healthcare programmes for the poor and elderly and payouts to pensioners.

It would ease the automatic across-the-board spending cuts known as the sequester by $63 billion, while making $85 billion in cuts elsewhere and reducing the deficit by $23 billion.

A two-week-plus government shutdown in October ended with a short-term budget deal that authorised spending through January 15 and allowed the US Treasury to borrow into February.

That agreement had established a bipartisan committee from the House of Representatives and the Senate, tasked with delivering a negotiated budget resolution by Friday.

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