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FILE PHOTO: U.S. President Donald Trump's overview of the budget priorities for Fiscal Year 2018 are displayed at the U.S. Government Publishing Office (GPO) on its release by the Office of Management and Budget (OMB) in Washington, U.S. on March 16, 2017. REUTERS/Joshua Roberts/File Photo

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By Richard Cowan

WASHINGTON (Reuters) - Negotiators in the U.S. Congress reached a deal late on Sunday on around $1 trillion in federal funding that would avert a government shutdown later this week, while handing President Donald Trump a down payment on his promised military buildup.

The full House of Representatives and Senate must still approve the bipartisan pact, which would be the first major legislation to clear Congress since Trump became president on Jan. 20.

Prompt passage of the legislation was expected this week.

"We couldn't be more pleased," Vice President Mike Pence said in an interview on CBS "This Morning." He called the deal "a bipartisan win for the American people" that included funding for a significant increase in military spending and a down payment on border security.

Trump signed off on the parameters of the measure on Sunday morning, Pence said.

The funds, which should have been locked into place seven months ago with the start of fiscal 2017 on Oct. 1, would pay for an array of federal programs from airport and border security operations to soldiers' pay, medical research, foreign aid, space exploration and education.

Jennifer Hing, a spokeswoman for Republicans on the House Appropriations Committee, said the agreement will "move the needle forward" on conservative priorities while keeping the federal government running.

If it is not enacted by midnight Friday, federal agencies would have to lay off hundreds of thousands of workers and require many others to continue on the job providing law enforcement and other essential operations without pay until the funding dispute in Congress is resolved.

"This agreement is a good agreement for the American people and takes the threat of a government shutdown off the table," Senate Democratic leader Chuck Schumer said in a statement.

He said the measure would increase federal investments in medical research, education and infrastructure.

House and Senate appropriators worked into the night to draft the legislation for lawmakers to review.

Republican Representative Jim Jordan, chairman of the House Freedom Caucus, said he and other conservatives likely would not back the measure because it does not fulfill their promises to voters.

"I'm disappointed," Jordan told CNN. "We'll see how it plays out this week but I think you're going to see conservatives have some real concerns with this legislation."

A senior congressional aide said the Pentagon would win a $12.5 billion increase in defence spending for the fiscal year that ends on Sept. 30, with the possibility of an additional $2.5 billion contingent on Trump delivering a plan to Congress for defeating the Islamic State militant group.

Trump had requested $30 billion more in military funds for this year after campaigning hard on a defence buildup during the 2016 election campaign.

NO WALL MONEY

Several other important White House initiatives were rejected by the Republican and Democratic negotiators, including money for a wall on the U.S.-Mexico border that Trump has argued is needed to stem the flow of illegal immigrants and drugs.

Instead, congressional negotiators settled on $1.5 billion more for border security, including more money for new technology and repairing existing infrastructure, the aide said.

Trump, in an interview with CBS broadcast on Monday, said a separate infrastructure plan would come within three weeks.

The Trump administration had earlier backed away from a threat to end federal subsidies for low-income people to get health insurance through Obamacare, the program that Trump had pledged to repeal.

Republicans are struggling over a repeal and replacement plan for former President Barack Obama's landmark healthcare law and it was unclear whether they would be able to bring such legislation to the House floor soon.

While Republicans control the House, Senate and White House, Democrats scored other significant victories in the deal.

Puerto Rico would get an emergency injection of $295 million in additional funding for its Medicaid health insurance program for the poor, according to the aide who asked not to be identified. The impoverished U.S. territory is facing a severe Medicaid funding shortfall.

Democrats also fended off potential cuts to healthcare provider Planned Parenthood, while House Democratic leader Nancy Pelosi applauded a nearly $2 billion hike in funds for the National Institutes of Health this year.

Coal miners and their families facing the loss of health insurance next month would receive a permanent renewal under the spending bill.

While Trump has urged Congress to impose deep cuts to the Environmental Protection Agency, most of its programs would be continued for at least the remainder of this year, according to the aide.

The House is likely to vote first on the package, probably early in the week, and send the measure to the Senate for approval before Friday's midnight deadline.

If the legislation is enacted by week's end, Congress would then have to begin focusing on a series of bills to fund the government at the start of the next fiscal year.

(Additional reporting by Doina Chiacu and Susan Heavey; Editing by Paul Tait, Chizu Nomiyama and Meredith Mazzilli)

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