The US Senate voted Thursday to soften a controversial "Buy American" clause in the much talked about economic recovery package, after warnings it might spark a "trade war".

The clause had sought to ensure only US iron, steel and manufactured goods were used in projects funded by the bill, the BBC reported.

But senators approved an amendment requiring that provisions in the bill comply with international trade agreements with Canada and the EU.

Earlier President Barack Obama said the US should avoid seeming protectionist.

The White House had said that it supports giving preference to domestic manufacturers in public works programs - but only if it does not violate existing trade agreements.

Due to the softening of the clause, some Republicans in the senate, including Presidential candidate, John McCain, have started to question other parts of the stimulus package. The package is, however, likely to be signed off by the senate before the end of this week.

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