The Senate's approval by 68 votes to 32 was by the narrowest of margins - just one vote more than the two-thirds majority required.

The outcome was seen as a victory for President Jimmy Carter's foreign policy at a time when the effectiveness of his administration is under question.

Last September President Carter signed two treaties with Panama's leader, General Omar Torrijos Herrera.

The first provided for the gradual transfer of the canal to Panamanian control on 31 December 1999.

The other declared the canal neutral territory and open to vessels of all nations.

However, the US has retained the right to defend the canal, preferably in support of Panama but alone, if necessary.

Domestic opposition

The canal - a 51-mile (82-kilometre) swath through Panama - cuts thousands of miles off sea journeys between the Atlantic and Pacific Oceans.

Started by the French in 1880, the US took over the construction of the canal in 1904 and completed it 10 years later.

In return for rights to the waterway the US recognised Panama - which was then attempting to break away from Colombia - as a sovereign state and paid it $10m and an annuity of $250,000.

During the First and Second World Wars the canal was a vital strategic artery for the United States and its allies.

But it could not accommodate the larger vessels which had become part of the US fleet by the time of the Korean War.

There had been fierce domestic opposition to the prospect of giving up the canal which critics argued was a necessary part of the US's defences.

But President Jimmy Carter argued that the issue of the canal was leading to an upsurge of anti-American feeling in Panama and other Latin American nations.

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