The $471 billion bill, passed 400-15, does not include President Bush's $196 billion request for operations in Iraq and Afghanistan, except for an almost $12 billion infusion for new troop vehicles that are resistant to roadside bombs.
The House-Senate compromise measure would be the first of 12 appropriations bills for the budget year that began Oct. 1 to be signed into law by Mr. Bush, who has promised to veto Democratic-driven increases for domestic programs.
Later Thursday, the House is slated to give final approval to a health, education and job training bill that the president has promised to veto.
Much of the increase in the defense bill is devoted to procuring new and expensive weapons systems, including $6.3 billion for the next-generation F-35 Joint Strike Fighter, $2.8 billion for the Navy's DD(X) destroyer and $3.1 billion for the new Virginia-class attack submarine.
The defense measure also provides enough money to give U.S. military personnel a 3.5 percent pay raise, an increase of half a percentage point over Bush's budget request. The bill also provides $6 billion to finance growth in U.S. troop strength by 5,000 Marines and 7,000 Army soldiers.
Meanwhile, Speaker Nancy Pelosi said the House will vote as early as Friday on a separate bill to provide a "bridge fund" of $50 billion for the wars in Iraq and Afghanistan, contingent on President Bush starting to bring troops home.
That separate war funding measure would be sufficient to maintain troop levels in Iraq until well into next year, but its conditions are certain to be rejected by Mr. Bush. They are likely to be modified by the Senate next week, however.
The Pentagon funding bill is Mr. Bush's top priority in the budget endgame consuming so much time and energy on Capitol Hill. The 2008 budget year began Oct. 1, but not a single spending bill has been sent to Bush.
A stopgap funding bill expires next week, so the defense measure contains an extension to keep government agencies open until Dec. 14.
The stopgap funding measure also contains $3 billion in funding for Louisiana's Road Home program to rebuild housing stock destroyed by Hurricane Katrina, $2.9 billion in Federal Emergency Management Agency disaster funding and $500 million to combat recent Western wildfires.
The Democratic military budget would provide $8.7 billion for missile defense, about 2 percent less than requested by Mr. Bush. It meets Mr. Bush's request for 26 V-22 tilt rotor aircraft for the Marines and the Air Force at almost $100 million each; the program has been dogged by cost overruns and safety questions.
The Army's Future Combat System, a computerized system designed to transform the service's war fighting abilities, would absorb a 5 percent cut from Mr. Bush's request. It, too, has been plagued by cost overruns.
Huge procurement costs are driving the Pentagon budget ever upward. Once war costs are added in, the total defense budget will be significantly higher than during the typical Cold War year, even after adjusting for inflation.
Overall, the measure is $3.5 billion less than Mr. Bush's request and it cuts another $2.8 billion from operations and maintenance accounts funding day-to-day military operations. That $2.8 billion cut allows lawmakers to direct funds to their priorities, secure in the knowledge that the operational funding will be paid back later when Congress passes a war funding bill.
Later Thursday, House-Senate negotiators are slated to meet on another domestic bill, a $50.6 transportation and housing measure. The bill contains $195 million to replace the collapsed Interstate 35W span in Minneapolis.