US President Joe Biden has postponed a visit to Australia, the second leg of his upcoming Asia trip, to focus on crucial debt-ceiling talks to prevent a catastrophic federal default, prompting the cancellation of Quad leaders' meeting in Sydney.

Biden postponed the Australia leg of his trip, along with that of Papua New Guinea, given the uncertainty and intense negotiations with the opposition Republican Party to ensure that America does not default on its debt for the first time in history.

In Australia, Biden was scheduled to participate in the third in-person summit of the Quad leaders along with Prime Minister Narendra Modi, Japanese Premier Fumio Kishida and Australian Prime Minister Anthony Albanese.

Biden will still travel to Hiroshima, Japan starting Wednesday for the G7 leaders' meeting.

During a phone call with Albanese to inform him of his decision, Biden invited the prime minister for an official state visit to Washington at a mutually convenient time. Biden is hosting Modi at the White House on an official state visit on June 22. The two leaders were scheduled to meet in Australia on the sidelines of the Quad summit.

However, their planned meeting in Japan on the sidelines of the G7 later this week would be in accordance with the schedule, the White House said.

Biden's announcement at the top of his remarks at the Jewish American Heritage Month celebrations at the White House came soon after his meetings with the Congressional leadership, including House Speaker Kevin McCarthy of the Republican Party.

"I am cutting my trip short. I am postponing the Australia portion of the trip and my stop in Papua New Guinea in order to be back for the final negotiations with Congressional leaders," Biden told his guests.

"I spoke today with Prime Minister Albanese of Australia a short time ago and let him know what was going on. There was an overwhelming consensus, I think, in today's meeting of the Congressional leaders that defaulting on the debt is simply not an option. Our economy would fall into recession," the president said.

"It would devastate retirement accounts, increase borrowing costs and according to Moody's, nearly eight million (80 lakh) Americans would lose their jobs, and our international reputation would be damaged in the extreme if we were to let that happen. It is disappointing that our discussions with the congressional Republicans have not been willing to discuss raising revenues," he said.

But the policy differences between the parties should not stop Congress from avoiding default, President Biden said.

"I made clear again in today's meeting that default is not an option. America pays its debts, pays its bills, and there will be plenty of time to debate the policy differences. But the country never defaulted on our debt and we never will," he said.

"The nature of the presidency is addressing many of the critical matters all at once, so I am confident we are going to continue to make progress toward avoiding default and fulfilling America's responsibility as a leader on the world stage," Biden explained.

The announcement came soon after his meetings with the Republican leaders and his own Democratic Party leaders from Congress. Even though the leaders agreed that defaulting on debt is not an option, there were sharp differences on the path forward, necessitating intense negotiations between the two parties.

Biden's absence from the country at this critical moment would have made it difficult for his administration, as a result of which the president decided to cut short his trip and return home directly from Japan.

After the cancellation of Biden's trip, Australian Prime Minister Albanese on Wednesday said that next week’s Quad leaders meeting in Sydney will not go ahead.

“The Quad leaders' meeting will not be going ahead in Sydney next week,” he said in Tweed Heads, a town in New South Wales.

Albanese said the leaders of Australia, the US, India and Japan would instead meet at the G7 Summit in Japan this weekend. Albanese says it's still possible that Indian Prime Minister Modi will visit Sydney next week, ABC News reported.

"All four leaders — President Biden, Prime Minister Kishida, Prime Minister Modi and myself — will be at the G7, held in Hiroshima on Saturday and Sunday. We are attempting to get together over that period of time [and] I'll have a bilateral discussion with President Biden," Albanese said.

"At this stage, we haven't got a time locked in for that arrangement." Albanese said it was still possible that Prime Minister Modi and Japanese Prime Minister Fumio Kishida would visit Sydney next week, but officials in all three countries were still trying to confirm their plans.

"We are in discussions with the Quad leaders over today. We'll make further announcements about that, but Prime Minister Modi would certainly be a very welcome guest here next week," he said.

Meanwhile, the White House reiterated that Quad remains a priority.

"Revitalising and reinvigorating our alliances and advancing partnerships like the Quad remains a key priority for the president. This is vital to our ability to advance our foreign policy goals and better promote global stability and prosperity. We look forward to finding other ways to engage with Australia, the Quad, Papua New Guinea and the leaders of the Pacific Islands Forum in the coming year," White House Press Secretary Karine Jean-Pierre said.

In November 2017, India, Japan, the US and Australia gave shape to the long-pending proposal of setting up the "Quad" to develop a new strategy to keep the critical sea routes in the Indo-Pacific free of any influence amid China's aggressive behaviour in the region.

China is engaged in hotly contested territorial disputes in the South and East China Seas. Beijing has also made substantial progress in militarising its man-made islands in the past few years.

Beijing claims sovereignty over all of the South China Sea. But Vietnam, Malaysia, the Philippines, Brunei and Taiwan have counterclaims. In the East China Sea, China has territorial disputes with Japan.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.