Under the deal between wealthy and developing nations, the assembly adopted a resolution for a two-year, $3.8 billion (2.2 billion pounds) administrative budget, thereby averting a financial crisis.

But the resolution capped UN spending at $950 million -- enough only for the first six months of 2006 -- after which Secretary-General Kofi Annan has to ask the assembly for more funds to pay staff.

The 191-nation General Assembly's decision, after months of arduous negotiations, was taken by consensus, without a vote.

Several nations, including Egypt, India and Jamaica, refused to link reforms to the budget. But U.S. Ambassador John Bolton said this was implicit since the assembly would have to approve additional funding in six months time.

Bolton called the pact a victory for the United States. He said Washington "obtained something it had been striving for the last three months -- clear linkage between management reform and the budget process at the United Nations."

But in a rare public disagreement, the European Union, headed by Britain, took credit for the compromise.

British Ambassador Emyr Jones Parry told reporters that for "95 percent of the time, it has been us (the EU) who have been building a bridge with the G-77," the UN grouping representing 133 developing nations.

The EU objective, he said, was to "avoid confrontation but give an impetus to the reform process."

France was even blunter. Its UN ambassador, Jean-Marc de la Sabliere, said: "The European Union was at the centre of the game. The United States, Japan and the G-77 were compelled to make compromises."

But Jamaican Ambassador Stafford Neil, representing the G-77 nations, said he had fought hard against the spending cap. But his group had reluctantly gone along after receiving assurances that the tactic was a one-time measure that would not be repeated in future years.

Neil insisted there was no linkage between implementing reforms and UN funding for the second half of 2006 because the additional monies would depend on Annan's recommendation.

Negotiators had been working against a midnight December 31 deadline for the General Assembly to either approve a budget plan or trigger a shutdown of the United Nations.

Rich countries as well as Annan have been pushing hard for management reforms following allegations of corruption and mismanagement at the world body, particularly in its handling of the oil-for-food program for Iraq.

Included among the reforms that the General Assembly must approve are a new human rights body, new international accounting standards, a review of programs older than five years and a beefed-up internal watchdog office.

Bolton at one time proposed a three- or four-month interim budget until reforms were approved but received little support from the European Union, Japan, Canada, Australia and New Zealand, which, together with the United States, collectively pay 85 percent of the budget.

Until Friday, developing nations dug in their heels, fearing the changes would dilute their influence over UN programs and priorities by weakening the role of the General Assembly, where each member has a vote and no nation has a veto. Several argued that the dues they paid represented a large sum for their country.

Some U.S. lawmakers have threatened to slash Washington's UN dues payments, which alone make up some 22 percent of the administrative budget, excluding peacekeeping, if reforms were not enacted. Japan pays nearly 20 percent.