The U.S. Treasury Department, facing the prospect of piercing the legal limit on U.S. debt within weeks, said on Wednesday it was scaling back a borrowing program it runs on behalf of the Federal Reserve.

The decision limits one tool the U.S. central bank could have used in the future to contain inflation risks by selling short-term bills to soak up excess liquidity in the financial system as the economy strengthens.

The Treasury asked Congress in August to increase the $12.1 trillion debt ceiling, warning it might hit it by mid-October. It said on Wednesday its latest move would push that back by about six weeks to around the end of November.

Congress is often loath to raise the limit on publicly held debt, but this year's debate over the Obama administration's request for an increase is likely to be especially heated.

Lawmakers are already up in arms over the rising and record amount of debt and the exceptional range of measures that the Treasury and the Fed have taken to shore up banks.

Republican Senate Leader Mitch McConnell said this week that out-of-control spending and debt will push Republican legislators to register their concern at rising deficits.

We're all familiar with the budget, which puts us on a path to double the national debt in five years and triple it in 10, McConnell said. The White House budget office on August 25 predicted the budget deficit for fiscal 2009, which ends September 30, will hit $1.58 trillion.

The Treasury tried to put Wednesday's action in the best possible light as a tactical move.

It said the so-called Supplementary Financing Program, set up last year when the Fed and Treasury were in the midst of emergency lending to keep the financial system afloat, will shrink to $15 billion in coming weeks as bills issued under it mature without being rolled over.

Today's action provides us more flexibility, Treasury spokesman Andrew Williams said. Based on the latest information that we have, we currently project that we could reach the debt limit as soon as the end of November.

The program was set up to sell short-dated bills that are offered in addition to the Treasury's normal debt auctions. The proceeds from the sales were provided to the Fed, essentially taking money out of the financial system.

The Fed used the money to help finance hundreds of billions of dollars in lending to banks and to pump liquidity into the banking system through other support programs.

Fed officials have played down the significance of the program, suggesting it was just one weapon in its arsenal for ensuring it could remove money from the financial system before its extraordinary monetary support ignited inflation.

Officials were also aware that the Treasury already had a tough task managing the debt at a time the U.S. budget deficit was widening sharply. The Obama administration has forecast a record deficit of $1.6 trillion for this fiscal year.

A Fed spokeswoman on Wednesday said a reduced borrowing capability would not detract from the central bank's ability to tighten monetary policy when the time comes.

The Federal Reserve is confident that it will be able to adjust the stance of monetary policy when (its policy-setting committee) deems it appropriate, she said.

The borrowing program already had begun to contract as a gradually recovering economy meant that fewer emergency measures were required to prop up the financial system.

The program's balance peaked at about $559 billion in October and November of last year as the fallout from the financial crisis reached its worst. On Monday, the balance in the account stood at $199.32 billion.

Letting the program shrink is one of several steps the Treasury can take to keep from breaching the debt limit as it ramps up the politically difficult push to get lawmakers to raise it.

Among other actions the Treasury could take to delay hitting the debt limit is stopping the issuance of State and Local Government Securities, known as slugs, which allow these entities to park proceeds of municipal bond issues with the U.S. government until they are ready to spend them.

The ceiling was last raised in February when Congress passed a $787 billion economic stimulus package.