WASHINGTON (AP):

President Barack Obama praised Abraham Lincoln for his conviction that a divided nation could be made whole at a gala Wednesday night, capping a day when congressional leaders agreed on a compromise US$789 billion economic stimulus package.

The agreement marks a major legislative victory for the young Obama administration.

Saying the package is essential for pulling the US out of its economic tailspin, Obama has pressured Congress by taking his case to the American people, arguing that it is necessary to avert catastrophe.

Celebrations

On Wednesday night, the President and first lady Michelle Obama joined a crowd of Hollywood stars and Washington heavy-hitters celebrating the US$25 million renovation of Ford's Theatre, where Lincoln was assassinated.

Calling the theatre "hallowed space" where Lincoln's legacy thrives, Obama praised him for restoring a sense of unity to the country.

"For despite all that divided us - North and South, black and white - he had an unyielding belief that we were, at heart, one nation, and one people," Obama said. "And because of Abraham Lincoln, and all who've carried on his work in the generations since, that is what we remain today."

Earlier in the day, Obama called the final deal on the stimulus package a "hard-fought compromise", and he expressed gratitude in a statement to Congress, for its work.

"I want to thank the Democrats and Republicans in Congress who came together around a hard-fought compromise that will save or create more than 3.5 million jobs," the president said. Obama said the tax help and investments in health care, energy, education and construction projects will fuel the economy.

The emerging legislation is at the core of Obama's economic recovery programme and includes help for victims of the recession, in the form of expanded unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in school aid and other programmes.

In announcing Wednesday's deal, Senate Majority Leader Harry Reid, a Democrat, said marathon talks starting Tuesday produced a compromise between the differing bills passed earlier by the Senate and House. White House officials often joined in the talks.

Middle ground

"The middle ground we've reached creates more jobs than the original Senate bill and costs less than the original House bill," Reid said.

The bill preserves Obama's signature tax cut - a break for millions of lower and middle income taxpayers, including those who don't earn enough to pay income taxes.

The president also won money for two other administration priorities - information technology in health care, and "green jobs" to make buildings more energy-efficient and reduce the nation's reliance on foreign oil.

The bill "will be the beginning of the turnaround for the American economy," predicted Senator Joseph Lieberman, the independent from Connecticut.

Republicans have continued to express opposition to the bill, despite Obama's goal of bipartisan support. The events capped a frenzied 24-plus hours that began at midday Tuesday when the Senate approved its original version of the bill on a party-line vote of 61-37.