The decision, which amounts to an increase in the federal line of credit, was considered necessary because this year's federal deficit spending meant the United States would surpass the old debt limit of $7.4 trillion, a move that could eventually lead to a default on government-issued securities.
President Bush, who has pledged to halve the deficit over the next five years, welcomed Congress' approval this week.
"The president commends the Congress for passing the debt limit increase," White House spokesman Scott McClellan said late Thursday. "Passage of this legislation was important to protect the full faith and credit of the United States."
Democrats almost universally blamed President Bush's tax policy and his continued spending for the need to up the national debt ceiling.
"These record deficits are the direct result of irresponsible Republican choices: tax cuts for the wealthy and reckless corporate handouts," said House Minority Leader Nancy Pelosi, D-Calif., during the floor debate.
Republicans rejected the Democrats' accusations pointing to the recent recession, ongoing military operations overseas and homeland security efforts in the United States as the major causes of the growing debt.
"While the publicly held debt has increased more rapidly in recent years, it is a result of the ongoing war against terrorism, an effort that began after the horrific attacks on our Nation on September 11, 2001," Rep. Thomas Reynolds, R-N.Y., said in introducing the bill.
The House approved the increase late Thursday on a largely party-line vote, 208-204. The debate focused largely on blaming the other side of the aisle for the accumulated debt.
Republicans accused Democrats of trying to score political points, while threatening Medicare and Social Security, two giant federal entitlements that take up much of the federal budget and would be unable to pay benefits without an increase in the debt ceiling.
"Let's not use our elderly as political pawns in trade for a seven-second sound bite back home," said Rep. Kevin Brady, R-Texas.
Democrats countered that the Republican-controlled Congress and White House were passing the bill to future generations.
"I want someone to explain to me how it can be moral for a father to stick his kids with his bills," said Rep. Gene Taylor, D-Miss.
The GOP-led Senate approved the debt limit increase on Wednesday, 52-44, in another almost party-line vote.
Despite passage in both houses, many Democrats and Republicans warned of the need for major steps to lower the deficit to bring the growth of the overall debt under control.
"I think it is a mistake for this body to extend the debt limit by $800 billion without a plan to get the deficits under control, to get the debt under control. Instead, what we are doing here is writing another blank check and saying to this administration: Go ahead, continue to run record budget deficits," Sen. Kent Conrad, D-N.D., told colleagues ahead of the Senate vote.
Just hours after Congress acted, Federal Reserve Chairman Alan Greenspan echoed Conrad, warning a ballooning national debt could eventually threaten the stability of the national economy, if measures were not instituted to control federal spending.