This was the highest monthly job loss in the US in 34 years.

"Congressional Democrats and the White House have reached an agreement," a senior congressional aide said on Friday.

Another source said negotiators had "agreed in principle to moving ahead but details have to be worked out".

More talks were expected on Saturday with congressional votes on a bill next week.

The amount is far less than the $34bn in loans requested this week by General Motors, Ford Motor, and Chrysler, but it would keep them going into next year.

Some analysts expect Democratic politicians to seek more money for car manufacturers after a new congress meets and Barack Obama is sworn in as president on January 20.

Sharp downturn

The car manufacturers say they need help to survive a sharp downturn in sales prompted first by the credit crisis and now recession.

At hearings this week, many congress members were sceptical of their viability, arguing they had failed in the past to cut enough costs, to ween themselves from making vehicles that consume too much fuel, and to produce innovative cars consumers want to buy.

Congress and the White House are anxious to prevent the threatened near-term collapse of one or more of the Detroit Three - which directly employ 250,000 people.

GM and Chrysler have asked for immediate loans to forestall possible failure, while Ford is asking for a $9bn credit line that would be tapped later if necessary.

GM wants $12bn in loans, with $4bn of that immediately, as well as a $6bn credit line. Chrysler wants $7bn.

Bob Nardelli, CEO of Chrysler, said on Friday that the company needs $4bn to run operations through March.

Over the same time frame, Rick Wagoner, CEO of GM, said his company needs $10bn to keep going.

Alan Mulally, CEO of Ford, said again that his company does not immediately need to use federal funds.

GM and Chrysler could not immediately be reached for reaction to the aid developments.

Earlier on Friday, Nancy Pelosi, the US House of Representatives speaker, had dropped her insistence that aid come from the $700bn financial services bailout fund that the Bush administration had refused to use for car manufacturers.

Energy technology loan

A source with knowledge of the discussions told Reuters that the money would come from an existing $25bn advanced energy technology loan fund to help car companies meet new fuel-efficiency standards - an idea the White House has promoted.

In a statement Pelosi had suggested she could agree with that source of funds under certain conditions.

"We will not permit any funds to be borrowed from the advanced technology programme unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative," she said.

Compromising on the source of funds would likely build bipartisan support in congress for a bill that could be signed into law by George Bush, the US president.

Both Pelosi and Harry Reid, the senate majority leader, said in statements they expected to have votes next week on an automaker assistance plan.