until 31 January.
Democrats have a majority in the Senate, but could not muster enough support to advance a proposal to lift the debt ceiling there. Talks between House Republicans and the White House had collapsed earlier.
Republicans have refused to pass a new budget unless Obama agrees to delay or eliminate the funding of the healthcare reform law dubbed Obamacare.
Hundreds of thousands of federal employees have been sent home as a result of the shutdown. Obama has repeatedly said he would not undermine the law nor negotiate over larger budget matters, until Republicans vote to end the threat of default and has also rejected a short-term deal over the debt limit.
Republicans had this week suggested a six-week extension to US borrowing authority, but Obama said he wanted a long-term deal sensing the upper hand in the confrontation with opinion polls mostly blaming Republicans for the crisis.
"It wouldn't be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season," Obama said.
World Bank chief Jim urged US policymakers to quickly come to a resolution before they reach the debt ceiling deadline.
"The closer we get to the deadline, the greater the impact will be for the developing world. Inaction could result in interest rates rising, confidence falling, and growth slowing," he said on Saturday.
"If this comes to pass, it could be a disastrous event for the developing world, and that in turn will greatly hurt the developed economies as well," Jim said.
Meanwhile, in a sign of a possible thaw in the crisis, popular tourist sites like the Statue of Liberty, the Grand Canyon and Mount Rushmore, closed till now, have reopened enabling some workers to get back to work.