The stimulus package, reduced from its original size of around $937bn, aims to cut taxes for the US middle class, boost construction projects and create up to four million new jobs.
Most Republicans, and some moderate Democrats, had opposed the stimulus plan, arguing it expanded government spending too much and did not include enough tax cuts needed to boost the economy.
Members of the house and senate from both the Republican and Democrat parties had forged an agreement on the deal on Wednesday following long-drawn-out talks.
Obama had urged the Democratic-controlled congress to pass the stimulus bill before the end of the coming holiday weekend so he can sign it into law.
Partisan view
The stimulus package contains about $287bn in tax breaks, with the remaining $500bn to used in spending plans.
About $120bn will be go towards roads and transport projects, as well as improving broadband technologies.
Another $30bn is devoted to healthcare and medical research projects, while $6bn will go towards guaranteed loans aimed at boosting renewable energy projects.
While the passage of the bill by the senate is a boost to Obama, ideological differences over the plan have highlighted the divide between Democrats and Republicans.
"It is a victory in the sense that it is happening with unprecedented speed, especially when one considers the amount of money involved, but it is not a victory for bipartisanship," Nick Spicer, Al Jazeera's correspondent in Washington DC, said.
"President Obama wanted to govern in a bipartisan way, and that certainly has not been happening."
The package is unlikely to be the last in a series of multibillion dollar plans to rescue the US economy, Spicer said.
"The bill was described as something that had to be passed ... but next week we are looking at coming up with another $700bn to overhaul the financial system. This is basically economic recovery on an instalment plan," he said.
'Essential plan'
Obama on Thursday described the stimulus package as essential to turn around the US economy, which has been buffeted by the subprime mortgage crisis, tight credit, failing banks and the global economic slowdown.
Right now, we have a once in a generation chance to act boldly, to turn adversity into opportunity, and use this crisis as a chance to transform our economy for the 21st century," he said.
"That is the driving purpose of the recovery and reinvestment plan."
However, Lawrence Summers, director of the White House National Economic Council, told NBC on Friday that the stimulus package is not some "miracle cure" or "silver bullet" for the economy.
"I think this is a key part of what's going to be a multipart strategy to contain this decline," he said.
"[The problems] weren't made in a week, a month, a year. It's going to take time to fix."