The Senate was set to approve the package later in the day, following two weeks of debate, and the president could have the bill on his desk by late next week. The House vote was 303-125.
Both houses generally acceded to the White House's spending blueprint with one major exception: the Senate on Thursday defied strong administration pressure and voted to require Iraq to eventually repay half of $20.3 billion set aside for its reconstruction. The House, in a similar vote, narrowly sided with the administration on the loan issue.
House GOP leaders pushed the measure to a final vote over the objections of Democrats who said they still had more than 100 amendments they wanted to offer.
"This is the exactly the moment when this House should step forward, when the country should step forward to show we have a commitment that will not stop," House Majority Whip Roy Blunt, R-Mo., said.
Also Friday, the House accepted an amendment by Reps. Jim Ramstad, R-Minn., and Dennis Moore, D-Kan., shifting $98 million from Iraq reconstruction to help troops on leave pay for their trips home.
For the first time since the Vietnam War, the military is giving service members with 12 months in the field in Iraq or Afghanistan a 15-day home leave. But after flying into the port of entry in this country, they must pay for the rest of their trip out of their own pockets and are "too often stranded at the airport, no where near their homes or families," Ramstad said.
By a mostly party-line 55-44 vote Friday, the Senate rejected an amendment by Senate Minority Leader Tom Daschle, D-S.D., barring future U.S. aid to Iraq — beyond the money in the current bill — unless Mr. Bush certifies that foreign countries' contributions equal those by the United States
In the House, Democrats David Obey of Wisconsin and Tom Lantos of California sought to convert half the $18.6 billion in the House bill for reconstruction, but lost, 226-200.
Thursday's Senate vote on Iraqi loans was an embarrassing setback for the White House and a rare defeat for the president in the Republican-controlled congress, reports CBS News Correspondent Peter Maer. Mr. Bush, Vice President Dick Cheney and Secretary of State Colin Powell personally lobbied against the loan approach, which passed the Senate with eight Republican defections.
"There was just some very sharp elbows thrown by administration officials" on the loan issue, said Rep. Mike Pence, R-Ind., who unsuccessfully tried to move a loan amendment in the House.
But the administration was confronted by lawmakers who said constituents were disturbed by the idea that the United States, while racking up record federal deficits, was giving billions in aid to a nation sitting on the second largest oil reserves in the world.
"It was very difficult to stop this train because it made so much sense," said Sen. Olympia Snowe, R-Maine, one of the eight Republicans who voted for the loan amendment, which passed 51-47 Thursday.
Daschle said the vote sent a strong message to the Bush administration that "it must do more to ensure that America's troops and taxpayers don't have to go on shouldering this costly burden virtually alone."
Senate Majority Leader Bill Frist, R-Tenn., promised to work hard to remove the loan provision when House and Senate negotiators meet, probably next week, to decide on the final version they will send to the president.
The goal is to get the bill on the president's desk before next week's conference of donor nations in Madrid, Spain.
But Frist acknowledged that "back home, people were asking for loans. ... It was very divided, very close, and that probably reflects feelings around the country."