Democrats broke a logjam in President Barack Obama's drive to revamp the costly healthcare system on Wednesday when a group of party conservatives accepted a compromise that allowed a reform bill to advance in the U.S. House of Representatives.

Obama praised the compromise and said he was grateful that lawmakers are working so hard to find common ground. Those efforts are extraordinarily constructive in strengthening this legislation and bringing down its cost.

The agreement with four conservative congressmen from Obama's Democratic party sparked immediate grumbling from liberals, Republicans and others even as the breakthrough allowed a key House committee to take up the bill.

Since taking office six months ago Obama has made an overhaul of healthcare, which accounts for one-sixth of the U.S. economy, his top legislative priority.

He insists it is crucial to a broader economic recovery and has pushed lawmakers -- due to recess for a month soon -- to quickly forge a deal to rein in healthcare costs, improve care and cover most of the 46 million uninsured Americans.

Representative Mike Ross, a leader of the conservative Democrats known as the Blue Dogs, told reporters the bill would be considered by the Energy and Commerce Committee on Wednesday but the full House would not take up the issue until September when it returns from its month-long break.

The Blue Dogs had put the brakes on the bill in the panel, the last of three House committees to vote on it, over concerns about costs and other issues. With the agreement, House leaders can move the bill through that committee even if the full House later reverses it.

Ross said the deal, which followed lengthy negotiations with party leaders and the White House, would shave $100 billion off the price tag of at least $1 trillion, making it more palatable to fiscal conservatives in both parties.

But liberal Democrats said they were unhappy with some of the changes, and even other members of the 50-strong Blue Dog coalition who were not in the lengthy negotiations questioned how long it would hold up.

In the Senate, Republican and Democratic senators negotiating a healthcare reform deal also got a boost from congressional budget analysts who priced their bill at less than $900 billion over 10 years -- below some cost estimates of $1 trillion or more.

Senate Finance Committee Chairman Max Baucus said the Congressional Budget Office reported the legislation would reduce the federal deficit, spur growth in employer-provided health coverage and provide insurance coverage to 95 percent of Americans.

EDGING CLOSER

Three Democrats and three Republicans on the Senate Finance panel have edged closer to a deal this week that could form the heart of an eventual Senate healthcare plan.

I am confident they will get a bill ... a bipartisan bill will come out of that committee, Senate Democratic Leader Harry Reid told reporters.

Senator Charles Grassley, one of the panel's three Republicans involved in the talks, said in a Reuters interview the negotiators were making great progress but tough issues remained on financing and cost containment.

Senate Finance negotiations focused on a plan that would use nonprofit cooperatives to compete with private insurers to drive down costs, not the government option plan favored by Obama and many other Democrats.

The Senate panel also is likely to back a tax on high-cost insurance policies to raise revenue and keep costs down.

Dick Durbin, the Senate's second-ranked Democrat, said the lack of a public insurance option in the Finance Committee bill was not what he and many other Democrats wanted, but he was encouraging senators to stay patient.

Obama had asked both the Senate and House to come up with initial draft bills before the August recess, but that deadline is dead in the Senate and nearly impossible in the House. When they return, they will negotiate a joint bill which Obama hopes to sign into law this year.

Healthcare industry officials welcomed the efforts.

We applaud the efforts of Baucus and Grassley to try to make it a bipartisan approach because we think that will be thoroughly vetted and one where I think we're going to get more sustainable solutions coming out of it, Angela Braly, CEO of health insurer WellPoint Inc, said in interview with Reuters.

Obama, who has put considerable political capital on the line in the healthcare debate, traveled to North Carolina and Virginia on Wednesday for campaign-style events to tell Americans why insurance reform means more security and stability for them and their families.

Obama outlined eight specific consumer protections he said were needed, including: no discrimination for pre-existing conditions, only reasonable out-of-pocket expenses, no dropping of coverage for serious illness, no gender discrimination, no annual or lifetime caps and extended coverage for young adults.

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