The federal government's partial shutdown began with the new financial year at midnight. Legislation to fund the government stalled as congressional Republicans stuck with demands for changes in Obama's signature 2010 Affordable Care Act.

Obama said demand for health-care coverage yesterday at healthcare.gov "exceeded anything we expected".

Heavy volume contributed to technical problems and delays that plagued the rollout of the online insurance markets at the heart of the health-care law, according to state and federal governments.

The Democrat-controlled Senate twice on Monday rejected bills passed in the Republican-majority House of Representatives that conditioned keeping the government open on delaying key portions of the law. The House passed the last version again early yesterday, which was again rejected by the Senate.

Republicans passionately oppose the plan they have dubbed "Obamacare" as wasteful and restricting freedom by requiring most Americans to have health insurance.

Earlier Republican House Speaker John Boehner said he did not want a government shutdown, but the health care law "is having a devastating impact. ... Something has to be done."

Watch: US federal government shuts down for first time in 17 years

About 800,000 federal workers are being forced off the job and most non-essential federal programmes and services will be suspended.

People classified as essential government employees - such as air traffic controllers, border guards and most food inspectors - will continue to work, and the State Department will continue processing foreign applications for visas. Embassies and consulates overseas will continue to provide services to American citizens.

Stock markets around the world were resilient. US stocks edged higher in early trading yesterday, while European stocks mostly recovered after falling the day before the shutdown deadline. Asian stocks were mixed.

The shutdown may lessen the appetite of lawmakers for risking a debt default later this month.

The reaction of markets and the economic pain from a shutdown may sap the will of rank-and-file Republican members of Congress to go through with a second stand-off with Obama on the heels of this week's fight.

"It has the potential to make a significant difference," said Dan Meyer, chief of staff to former Republican House Speaker Newt Gingrich and later a congressional lobbyist in president George W. Bush's administration.

Some Republicans "want to play a little too close to the flame here and, frankly, some of them need to get their fingers singed", Meyer said. "They'll start feeling the heat pretty quick."

Boehner has issued a longer list of demands before he will support meeting the next major government fiscal requirement: raising the country's debt ceiling. US Treasury officials say action is needed by October 17 to raise the current legal limit of US$16.7 trillion or the government will default.

Boehner's conditions include approval of TransCanada Corp's Keystone XL pipeline, major revisions to the tax code, a one-year delay of the insurance mandate in the Obama health care law, means testing of the Medicare insurance programme for the elderly, and reductions in government regulations.

Some analysts argued that the inability of the two parties to agree on a short-term funding extension signals even greater difficulty for a debt-limit extension.

Chris Krueger, a Washington analyst for Guggenheim Securities, says there is a 40 per cent chance that Congress will fail to pass a debt-limit increase.

"Washington couldn't sink the short putt, and the debt ceiling is a much more difficult shot," Krueger said.