Physical attacks on people based on their sexual orientation will join the list of federal hate crimes in a major expansion of the civil rights-era law approved by US Congress on Thursday.

A priority of the late Democratic Senator Edward Kennedy that had been on the congressional agenda for a decade, the measure expands current law to include crimes based on sex, sexual orientation, gender identity or disability.

The measure, attached to a $US680 billion ($A732 billion) US defence spending bill, cleared the Senate by a 68-29 margin after sailing through the House of Representatives in a 281-146 ballot on October 8.

It now goes to President Barack Obama, who has vowed to sign the measure into law.

His predecessor, George W Bush, had opposed the measure.

The measure is named in part for Matthew Shepard, a homosexual college student in the western state of Wyoming who was murdered 11 years ago.

The hate crimes law, enacted after the 1968 assassination of civil rights icon Martin Luther King Jr, centred on crimes based on race, colour, religion or national origin.

The expansion has long been sought by civil rights and gay rights groups.

Conservatives have opposed it, arguing that it creates a special class of victims.

They also have been concerned that it could silence clergymen or others opposed to homosexuality on religious or philosophical grounds.

Joe Solmonese, president of the Human Rights Campaign, the nation's largest gay rights group, hailed the bill as "our nation's first major piece of civil rights legislation for lesbian, gay, bisexual and transgender people".

"Too many in our community have been devastated by hate violence," he said.

Some 45 American states have hate crimes statutes, and the bill would not change current practices where hate crimes are generally investigated and prosecuted by state and local officials.

But it does broaden the narrow range of actions - such as attending school or voting - that can trigger federal involvement and allows the federal government to step in if the Justice Department certifies that a state is unwilling or unable to follow through on an alleged hate crime.

The measure also provides federal grants to help state and local governments prosecute hate crimes and funds programs to combat hate crimes committed by juveniles.

"As we learned in the civil rights era, sometimes communities need assistance and resources from the federal government when they have to confront the most emotional and dangerous kinds of crimes," said Senator Michael Bennet, a Democrat.

The legislation also creates a federal crime to penalise attacks against US service members on account of their service.

The bill, known as the Matthew Shepard and James Byrd Jr Hate Crimes Prevention Act, is named after two men killed in separate US bias attacks - Shepard because he was gay, and Byrd because he was African-American.

Shepard, 21, died in October 1998 after suffering a beating by two men because he was gay, while Byrd, 49, was killed in June 1998 by three men in Texas who dragged him behind their truck.

"Hate crimes continue to affect far too many Americans who are simply trying to live their lives honestly, and they need to know that their government will protect them from violence, and provide appropriate justice for victims and their families," said Judy Shepard, president of the foundation named for her slain son.

At the urging of Republicans the bill was changed to strengthen free speech protections to assure that a religious leader or any other person cannot be prosecuted on the basis of his or her speech, beliefs or associations.

"Nothing in this legislation diminishes an American's freedom of religion, freedom of speech or press or the freedom to assemble," Democratic Senator Ben Cardin said.

"Let me be clear. The Matthew Shepard Hate Crimes Prevention Act targets acts, not speech."

That did not convince Republican Senator Jim DeMint, who said the bill was a "dangerous step" toward thought crimes.

He suggested the bill might "serve as a warning to people not to speak out too loudly about their religious views".