The legislation, which passed 80 to 14 in the Senate and 280 to 142 in the House, effectively ends a protracted standoff between Congress and the White House over the issue of troop withdrawal in the president's favor, although it does require the Iraqi government to meet specific targets as a condition for continued American aid.
Speaking to journalists at the White House shortly before the vote, President George Bush called the budget resolution the result of a hard-won agreement between the legislative and executive branches, but said that American patience was not limitless.
"As it provides vital funds for our troops, this bill also reflects a consensus that the Iraqi government needs to show real progress in return for America's continued support and sacrifice," he said.
The measure also requires Bush to deliver progress reports in July and September assessing the success of his "surge" strategy, which saw the deployment of thousands of additional troops in Iraq in an effort to quell growing sectarian violence.
Many Democrats were deeply unhappy with what they regarded as surrender on the crucial issue of a withdrawal timetable, which they argued the American people had unequivocally called for when they gave Democrats control of Congress in last year's legislative elections.
"The American people voted us into power for one reason," Representative Lynn Woolsey, Democrat of California said. "They trusted us to hold this administration accountable and to bring our troops home."
But the political reality of funding troops at war meant that the vote in favor was a foregone conclusion.
"Like it or not, we ran out of options," Representative David Obey, a Democrat from Wisconsin and chairman of the House Appropriations Committee, said. "There has never been a chance of a snowball in Hades that Congress would cut off those funds to those troops in the field."
In the end, the deal was made possible by a compromise House vote on a separate bill that included the first increase in the federal minimum wage in more than a decade and $17 billion in domestic spending on veterans and military health care.
Both bills were combined into one for the Senate vote, bringing the total cost of the measure sent to President Bush for signing to slightly under $120 billion.
Three Senate Democrats vying for their party's presidential nomination - Hillary Clinton of New York, Christopher Dodd of Connecticut and Barack Obama of Illinois - were among 14 Senate Democrats who opposed the bill.
Democratic Senator Joseph Biden of Delaware, who is also in the running, voted in favor.
