The announcement by lawmakers on Monday night came days ahead of a possible government shutdown in the absence of such an agreement.
Senate and House negotiators from both parties, who held a closed-door meeting in Washington, did not comment on the details of the deal, saying the staff is still working on last-minute logistics.
Sharp differences between Democrats and President Trump over border security and building a wall along the US-Mexico border resulted in a record partial government shutdown for more than 30 days.
"We've had a good evening. We've reached an agreement in principle between us on the Homeland Security and the other six bills,” Senator Richard Shelby told reporters at the US Capitol Hill Monday night.
As a result, the House and the Senate are likely to pass a new resolution before the February 15 deadline.
According to reports, the bill would provide USD 1.375 billion for wall construction, far less than USD 5.7 billion congressional funding Trump has demanded to build the wall. But, if accepted, the deal would end a standoff in which Trump has threatened to cut budgets from swaths of government this Friday.
The tentative agreement, according to the Hill newspaper, also specifically prohibits the use of a concrete wall. But, senior Congressional aides separately noted that it will fund approximately 55 new miles of barriers along the US-Mexico border in the Rio Grande Valley sector.
The agreement came as Trump went to the Southern Border in El Paso, Texas to address a rally with his supporters on wall.
The White House didn't comment on the agreement and Trump said at the rally, "We probably have some good news but who knows."
Addressing thousands of his supportes, many wearing his red "Make America Great Again" campaign hats, Trump said: "We need the wall and it has to be built and we want to build it fast."
According to Trump, illegal immigrants pose a national security risk to the US and can only be stopped by the construction of a border wall.
Earlier in the day, Trump said another government shutdown depends on the Democrats. “We've actually started a big, big portion of wall today in a very important location. And it's going to go up pretty quickly over the next nine months. That whole area will be finished. It's fully funded,” he said at a White House event.
"Construction, which I know a lot about, has begun. And it's a much better wall, much stronger wall, and a much less expensive wall than we've been building. And we're going to have a lot of wall being built in the last -- in the next period of time,” he said during his meeting with National Sheriffs.
The US he said, needs a wall. “And all of the other things are nice to have. But without a wall, it's not going to work. We can have technology, we can have beautiful drones flying all over the place, but it doesn't work without the wall,” he said.
Trump said the wall could be given any name. “We need a wall. We can call it anything. We'll call it barriers. We'll call it whatever they want. But now, it turns out not only don't they want to give us money for the wall, they don't want to give us the space to detain murderers, criminals, drug dealers, human smugglers,” he said.
"How bad is that? Human smuggling. People think of that as an ancient art. There are more human smugglers right now -- traffickers, they call them -- than at any time in the history of our world, because of the Internet, unfortunately,” said the US President.
In December, Trump pushed back at Congress by refusing to fund large sections of the government, leading to record-breaking government shutdown in America's history that affected some 800,000 federal employees.
In January last, Trump backed a deal to temporarily end the five-week shutdown despite getting no funding for his controversial plan to build the wall along the US-Mexico border.
The deal resolved the crippling 35-day closure but not the fight over his proposed border wall. He had given Congress until February 15 to come up with the wall money or face another shutdown.