With US incident commander Thad Allen saying the cement seal was holding and the well intercept was expected "toward the end of the week," BP appeared eager to turn a corner on the disaster, announcing it made an initial three-billion-dollar deposit into a huge US-managed fund to compensate Gulf Coast residents and businesses.

Obama hailed the latest progress to permanently seal the well that unleashed the worst accidental oil spill in history, and to get on with the monumental task of healing a badly battered environment and regional economy.

"Yesterday we learned that the procedure to prevent any more oil from spilling with a cement plug appears to have succeeded," he said.

"The final steps will be taken later in August when those relief wells are completed, but what is clear is that the battle to stop the oil from flowing into the Gulf is just about over."

But the president, who served Gulf of Mexico seafood at a White House event Sunday to help boost confidence in the Gulf's billion-dollar fishing industry, stressed that the broader, long-term effort to restore the devastated region was just beginning.

"The work goes on," he said during a White House ceremony Monday to honor the Superbowl champion New Orleans Saints American football team.

"I've made the commitment to the people of the Gulf Coast that I would stand by, not just until the well is closed, but until they recover from the damage that's been done. And that's a commitment that my administration is going to keep."

Allen said that after drilling down some 17,909 feet (5426 meters) below sea level in the Gulf of Mexico, the relief well was now only 30 to 40 feet from the outside casing of the well shaft.

The retired US Coast Guard admiral said the relief well was closing in on the last "30 or 40 feet at this point," but that it was slow going as engineers removed the drill bit every few dozen feet in order to insert a sensing wire to assess progress.

"We expect that sometime toward the end of the week we'll be in a position to intercept the annulus and commence the kill," Allen said.

Once the interception occurs, engineers will then pump a mixture of heavy drilling fluid, known as "mud," and cement into the well shaft and its casing, providing a permanent seal to the busted well.

Allen said some "very small leaks" were detected around flanges at the capping stack atop the ruptured wellhead, but that they were dribbling out a "negligible amount" of hydrocarbons.

"In general, it is holding," he said of the seal.

BP announced last week it had cemented and closed the well, which ruptured after an explosion on the Deepwater Horizon rig April 20 that killed 11 workers and unleashed the disaster.

On Monday the British energy giant said it had made its initial deposit of 3.0 billion dollars into a 20-billion-dollar US-managed fund to compensate residents and businesses battered by the spill.

"The purpose of the escrow account was to assure those adversely affected by the spill that we indeed intend to stand behind our commitment to them and to the American taxpayers," BP's incoming chief executive Bob Dudley said in a statement.

"Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast," he said.

Obama earned commitments from BP to pay into the account in mid-June.

The US Department of Justice said negotiations on the fund were completed Monday.

"We are pleased that BP made an initial contribution and has taken an important step toward honoring its commitment to the president and the residents and business owners in the Gulf region," US Associate Attorney General Tom Perrelli said.

The fund is being overseen by prominent lawyer Kenneth Feinberg, who managed compensation claims by victims of the September 11, 2001 terror attacks.

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