Henry Paulson’s nomination was approved by the upper house of Congress in a voice vote on Wednesday and the US president George Bush is hoping that the Wall Street veteran can kick-start his administration’s stalled economic programme.
The Senate's approval came hours after the Senate Finance Committee, which oversees the treasury, also approved Paulson.
No opposition was voiced to Paulson during the Senate debate and his nomination has been welcomed by both Democrats and Republicans.
"He will bring much-needed credibility to the economic message to hard-working Americans," the Democrat Max Baucus said during the debate.
Kit Bond, a Republican, described Paulson as "the right man at the right time."
Paulson, 60, has been the chairman and CEO of the financial giant Goldman Sachs which he joined in 1974.
He succeeds John Snow and will become the third treasury secretary of Bush's presidency at a time when growth is slowing and inflation rising in the economy.
In a three-hour hearing on his nomination on Tuesday Paulson echoed many of the administration's economic priorities and policies.
He said he expected to be "quite active" on international issues during the remaining two and a half years of the Bush administration, including trying to persuade China to adopt a flexible currency.
"He will bring much-needed credibility to the economic message to hard-working Americans"
Max Baucus, Democrat senator
"They've been moving in that direction. ... We need to encourage them to move quicker because in my judgment they're not going to be as successful as they'd like to be until they open that up to competition," Paulson said.
He also said he wanted to pursue efforts to crack down on abusive tax shelters, work on ways to collect billions in taxes owed to the government, and explore ways to simplify the tax code.
Paulson is a multi-millionaire, with a personal wealth estimated at $700 million and says he will sell about $500 million of Goldman Sachs stock if confirmed as treasury secretary.