The US Treasury began taking measures on Thursday to prevent a default on government debt, as Congress heads towards a high-stakes clash between Democrats and Republicans over raising the borrowing limit.

Such "extraordinary measures" can help reduce the amount of outstanding debt subject to the limit, currently set at US$31.4 trillion, but the Treasury has warned that the tools would only help for a limited time – likely not longer than six months.

"I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," said Treasury Secretary Janet Yellen in a letter to Congressional leadership on Thursday.

Due to the debt limit, the Treasury Department would be unable to fully invest a portion of the Civil Service Retirement and Disability Fund, with a "debt issuance suspension period" to last until early June.

The Treasury will also halt additional investments of amounts credited to the Postal Service Retiree Health Benefits Fund, Yellen said.

The world's biggest economy could face severe disruption, with Republicans threatening to refuse the usual annual rubber stamping of an increase in the legal borrowing limit, potentially pushing the United States into default. (AFP)