The bill, which President George W Bush has called a critical tool for pursuing suspected terrorists, was passed 253 votes to 168.
The sweeping legislation sets guidelines to interrogate war on terror suspects and would send several hundred inmates held at the US naval base in Guantanamo Bay, Cuba to trial after years of detention.
The changes could impact on Australia’s only Guantanamo Bay inmate, David Hicks, who has been held for almost five years without charge.
The draft law permits secret CIA-run prisons, authorises special tribunals to try the Guantanamo detainees, and forbids "cruel and unusual" punishment of detainees -- without further clarification of what falls in that category.
The hardfought victory was crucial for the Bush administration, as his Republican Party faces the possibility of losing control of both chambers of Congress in November legislative elections.
The draft law was sent to the Senate late on Friday for debate and formal adoption.
Bush administration officials want the Senate to approve the deal before the legislators recess at the end of the month.
Critics charge that President Bush merely wants legal cover to allow interrogators to continue using "alternative" methods of questioning.
They reportedly include a simulated drowning technique known as "waterboarding," sleep deprivation, and subjecting suspects to extreme temperatures.