American car buyers are to be given tax-funded new car vouchers worth up to $4500 (£2750), depending on how fuel-efficient the car they are buying is.
Supporters have pushed for the measure to stimulate car sales and accelerate sales of fuel-efficient cars. In May, overall US car sales were 34 per cent lower than a year ago.
Opponents have criticised the fact that the bill has failed to include incentives for used vehicles and represented an artificial incentive for the industry.
"It's defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat," said Republican representative Jeff Flake.
Finance has been put in place to support around a million car sales, although a separate bill to provide another $1 billion (£610 million) in funding for the scheme has been proposed. The annual US car sales projection for 2009 is 9.5 million, down from 13.5 million in 2008.
Under the plans, car owners would get a voucher worth $3500 (£2138) if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon.
The value of the voucher would grow to $4500 (£2750) if the mileage of the new car is 10mpg higher than the old vehicle.
Owners of SUVs, pick-up trucks or minivans that get 18mpg or less would receive a voucher for $3500 if their new truck or SUV is at least 2mpg better than their old vehicle
The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.
The scheme has been set up with teh aim of taking vehicles built before 1984 off the road. It is estimated that newer cars would have a greater trade-in value than that of the voucher.