The US government has partially shut down after a midnight deadline to approve a budget for 2014 passed despite an eleventh-hour appeal by President Barack Obama.
The Republicans, who have a majority in the House of Representatives, were firm on their view that the House should delay Obama's healthcare reforms in order to pass the budget.
Their proposal was rejected by Democrats in the Senate, who said it was too late to avert a shutdown.
A bipartisan committee was called almost one hour before midnight but it failed to reach an agreement.
Subsequently, the budget office at the White House began notifying federal agencies to begin a shutdown.
The office of the US Capitol tweeted at 11:56 pm ET: "Due to a lapse in government funding, this account will not be active until further notice."
The partial shutdown is the first for the US government in 17 years. The last time it was shut down was in 1995-96 when services were suspended for a record 21 days.
More than 700,000 US government workers, including 400,000 from the defence department, will be forced to take unpaid leave.
"Office buildings would close. Paychecks would be delayed. Vital services that seniors and veterans, women and children, businesses and our economy depend on would be hamstrung. Business owners would see delays in raising capital, seeking infrastructure permits, or rebuilding after Hurricane Sandy. Veterans who've sacrificed for their country will find their support centres unstaffed.
"Tourists will find every one of America's national parks and monuments, from Yosemite to the Smithsonian to the Statue of Liberty, immediately closed. And of course, the communities and small businesses that rely on these national treasures for their livelihoods will be out of customers and out of luck," Obama said at a press briefing.
If the shutdown lasts for a week, the economy would lose about $10bn (£6.19bn, €7.4bn) according to the White House.
"It would throw a wrench into the gears of our economy at a time when those gears have gained some traction," Obama said.
Essential services such as air traffic control and food inspections will continue to run.
Despite solid monthly gains for the month of September, the fears about the shutdown pulled down major US stock market indices.
The Dow Jones industrial average was down 128.57 points or 0.84% at 15,129.67.
The Standard & Poor's 500 Index declined10.20 points or 0.60% at 1,681.55.
The Nasdaq Composite Index was down 10.12 points or 0.27% at 3,771.48.
The pound gained against the US dollar, rising 0.33% to $1.62 as at 6:12 am GMT. The euro rose 0.13% against the dollar and is trading at $1.35.