The vote came just five days before the deadline to avoid a crippling default. The bipartisan agreement will now go to the Senate before President Joe Biden can sign it into law.
The US House of Representatives has passed a bipartisan bill raising the government's $31.4 trillion (€29.4 trillion) debt ceiling.
The vote was a crucial step in preventing a destabilizing default.
"This agreement is good news for the American people and the American economy," President Joe Biden said in a statement.
The Fiscal Responsibility Act needed a simple majority to clear the 435-member Republican-controlled House before advancing to the Senate.
The agreement between Republicans and Democrats allows more borrowing and ensures the country doesn't miss loan repayments, which would send the US and global economies into a potentially ruinous nosedive.
"It does what is responsible for our children, what is possible in divided government, and what is required by our principles and promises," Republican Speaker Kevin McCarthy said.
Ahead of the vote, Biden and McCarthy sounded upbeat as they assembled a coalition of centrist Democratic and Republican representatives opposed to the conservative backlash and progressive dissent.
The two politicians drafted a compromise bill after weeks of negotiations.
Overall, the 99-page bill restricts spending for the next two years, suspends the debt ceiling into January 2025 and changes policies, including new work requirements for older Americans receiving food aid and greenlighting an Appalachian natural gas line that many Democrats oppose.
The bill passed 314-117, surviving a rebellion from 71 conservative Republicans who voted no and argued the cuts did not go far enough.
What happens now?
Republican leader in the Senate, Mitch McConnell, said he expected the debt ceiling bill to come to the Senate as soon as Thursday.
It would then need to be signed into law by President Biden.
Progressive independent Senator Bernie Sanders, who caucuses with the Democrats, already announced he would no because of the gas pipeline included in the bill, among other reasons.
"I cannot, in good conscience, vote for the debt ceiling deal," he said.
Some Republican senators have also demanded an opportunity to make their own amendments to the bill, but Democrats have played down the possibility of this happening.
"We cannot send anything back to the House, plain and simple. We must avoid default," Senate Majority Leader Chuck Schumer said.