"This bipartisan agreement is the most significant improvement in senior health care coverage in nearly 40 years," Bush said in a statement.
Republican congressional leaders announced the breakthrough on Saturday, saying they had come to an agreement on principles. Daylong talks resolved the final disputes. They included a proposal to have traditional Medicare compete directly with new private insurance plans and a plan to encourage employers to maintain drug coverage for retirees, officials said.
"Seniors have waited a long time for help in paying for prescription drugs, and I am pleased that we are now on the verge of providing them with the help they need and the health care choices they deserve," the president said late Saturday.
He appealed for quick passage of the bill so he could sign it into law.
One of the Democrats who joined the negotiations, Sen. Max Baucus of Montana stressed that the deal would remain tentative until lawmakers had a chance to see the details of the complex legislation.
But the agreement ends months of negotiations over the drug benefit and a broad reworking of the Medicare program to give private insurers a new large role in health care for 40 million older and disabled Americans.
It must win approval of House and Senate negotiators, many of whom have been meeting for months in search of a compromise. The legislation would then go to the full House and Senate, where tough questions await from lawmakers in both parties.