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.