US House of Representatives Speaker John Boehner has said the House will not vote on a "clean" spending bill without conditions to end the government shutdown, and demanded spending cuts in exchange for raising the government's borrowing limit.
Mr Boehner said: "If we are going to raise the amount of money we can borrow, we ought to do something about our spending problem and lack of economic growth".
On October 17, the government is expected to hit the so-called debt ceiling, setting up another fiscal showdown.
US Republican majority leader Eric Cantor has said the House will vote for federal employees to receive pay after a shutdown of government services on Saturday.
Mr Cantor added that the House will also vote to re-open the Federal Emergency Management Agency (FEMA), the National Weather Service and the Head Start Program.
President Obama has blamed congressional Republicans for the US Government's budget shutdown, caused after the party sought delays to healthcare reforms, known as 'Obamacare'.
The stalemate is in its third day with little sign of compromise between Republicans and Democrats and concerns grow about the economic consequences.
Speaking today at a press conference, Obama said: "This whole thing is about one thing, the Republican obsession with the Affordable Care Act. That seems to be the only thing that unites the Republican Party right now."
Obama has called for a straight up-or-down vote to re-open government but said House of Representatives Republican leaders are intimidated by the most conservative members of their caucus.
Some Republicans have warned that they may use impending negotiations about the US debt ceiling to exact greater demands on a range of policies from President Barack Obama.
House Republicans have sought concessions and delays to the healthcare bill known as Obamacare, but these have been rejected by the Democrat-controlled Senate.
Representative John Fleming warned there "will be an even bigger list when it comes to the debt ceiling," which must be agreed by 17 October.
"We're going to be talking about the Keystone XL pipeline, movement of cuts into entitlement reforms, beginning to adjust sequester," he said.
Analysts fear the political deadlock in Washington could risk the US defaulting on its debt for the first time, sending prices soaring and global stock markets into turmoil.
Congress has until 17 October to agree on an increase to the $16.7 trillion borrowing cap, but Republicans and Democrats appear no closer to a resolution.
The last time the US came close to a default in 2011, stocks in America's largest companies fell some 17 points and one credit rating agency removed the country's top-tier rating.
The episode cost the US Treasury $1.3 billion (£803 million) in higher interest costs that year, according to a government study.
President Barack Obama warned that he will not negotiate over budget issues with Republicans in a bid to end the partial US government 'shutdown'.
Talks at the White House did not lead to a breakthrough but Obama remained hopeful that "common sense will prevail" in the standoff.
A statement from the White House said: "The president made clear to the leaders that he is not going to negotiate over the need for Congress to act to reopen the government or to raise the debt limit to pay the bills Congress has already incurred."
Obama held talks will senior US politicians, including the top Republican, House of Representatives Speaker John Boehner, over the government 'shutdown' which began on Tuesday.
Barack Obama has admitted he is "exasperated" with the US government services 'shutdown' and warned that Wall Street could be in trouble.
In a interview with CNBC, the president directed his frustrations towards the Republican politicians, saying their hostility to "civil" negotiation threatens not only the functioning of government, but the wider health of the economy.
"I am exasperated with the idea that unless I say that 20 million people, 'you can't have health insurance, they will not reopen the government.' That is irresponsible", he said.
The president also warned that Wall Street needs to be genuinely worried about the stalemate in Washington.
"It is important for [Wall Street] to recognize that this is going to have a profound impact on our economy and their bottom lines, their employees and their shareholders," Obama said
US intelligence officials warn that the government 'shutdown' is seriously damaging the intelligence community's ability to guard against threats and protect the US.
Director of National intelligence James Clapper told a Senate panel that an estimated 70% of intelligence staff from the CIA, National Security Agency and Defense Intelligence Agency have been placed on unpaid leave.
Another spy official also added that general morale had been devastated.
The US government has closed all 'non-essential operations' after Congress failed to reach a new budget deal. Read more on why the US government is in 'shutdown'
President Obama has invited congressional leaders and heads of big banks to the White House to "urge" politicians to reopen the government and raise the US debt ceiling, an official has said.