Two separate westbound German columns got stopped by defensive positions up to ten miles from the town.
Gen. Eisenhower realized that the Allies could destroy German forces much more easily when they were out in the open. Patton had ordered his staff to prepare three plans for a northward turn.
On 20 December, Eisenhower removed the First and Ninth U.S. Armies from Gen. Bradley's 12th Army Group and placed them under Montgomery's 21st Army Group.
By 21 December the Germans had surrounded Bastogne, which was defended by the 101st Airborne Division and Combat Command B of the 10th Armored Division. Conditions inside the town were tough. Food was scarce, and by 22 December artillery ammunition was restricted to 10 rounds per gun per day.
The weather cleared the next day, however, and supplies (ammunition) were dropped over four of the next five days.
Despite German attacks, the town held. The German commander, Lt. Gen. Heinrich Freiherr von Lüttwitz, requested Bastogne's surrender. When Brig. Gen. Anthony McAuliffe was told of the Nazi demand that he surrender, he refused.
Both 2nd Panzer and Panzer Lehr moved forward from Bastogne after 21 December. The 26th VG received one panzergrenadier regiment on Christmas Eve for its attack the next day. Because it lacked troops and those of the 26th VG Division were tired, the XLVII Panzer Corps concentrated its attack on several locations on the west side.
The attack was defeated and all the tanks destroyed. The next day, 26 December, Gen. Patton's 4th Armored Division broke through and opened a passage to Bastogne.
On 23 December, the weather conditions started improving, allowing the Allied air forces to attack. They bombed the German supply points in their rear. P-47 Thunderbolts started attacking the German troops on the roads.
Allied air forces also helped the defenders of Bastogne, dropping medicine, food, blankets, and ammunition. A team of volunteer surgeons flew in by military glider and began operating.
By 24 December, the German advance was stopped near the Meuse. Units of the British XXX Corps were holding the bridges at Dinant, Givet, and Namur and U.S. units were about to take over.
The Germans had no supplies, and shortages of fuel and ammunition were becoming serious. Up to this point the German losses had been light, especially in armor, which was almost unharmed with the exception of Peiper's losses.
On the evening of 24 December, General Hasso von Manteuffel recommended to Hitler a stop to all operations and a withdrawal. Hitler said no.
However, confusion at the Allied command prevented a strong response. In the center, on Christmas Eve, the 2nd Armored Division attempted to attack the 2nd Panzer Division at the Meuse.
The 4th Cavalry Group attacked the 9th Panzer Division at Marche. As result, parts of the 2nd Panzer Division were cut off. On 26 and 27 December the trapped units of 2nd Panzer Division made two break-out attempts.
Further Allied attacks near Marche led the Germans to know that no further action towards the Meuse was possible.
In the south, Patton's Third Army was battling to help the US troops in Bastogne. At 16:50 on 26 December, the Company D, 37th Tank Battalion of the 4th Armored Division, reached Bastogne, ending the siege.
On 1 January, in an attempt to keep the offensive going, the Germans launched two new operations. At 09:15, the "Luftwaffe" launched "Unternehmen Bodenplatte" (Operation Baseplate), a major campaign against Allied airfields in the Low Countries. Hundreds of planes attacked Allied airfields, destroying or severely damaging some 465 aircraft. However, the "Luftwaffe" lost 277 planes, 62 to Allied fighters and 172 mostly because of an unexpectedly high number of Allied flak guns, set up to protect against German V-1 flying bomb attacks and using proximity fused shells, but also by friendly fire from the German flak guns that were uninformed of the pending large-scale German air operation. The Germans suffered heavy losses at an airfield named Y-29, losing 24 of their own planes while downing only one American plane. While the Allies recovered from their losses in just days, the operation left the "Luftwaffe" weak and ineffective for the remainder of the war.
On the same day, German Army Group G ("Heeresgruppe G") and Army Group Upper Rhine ("Heeresgruppe Oberrhein") launched a major offensive against the thinly stretched, line of the Seventh U.S. Army. This offensive, known as "Unternehmen Nordwind" (Operation North Wind), was the last major German offensive of the war on the Western Front. The weakened Seventh Army had, at Eisenhower's orders, sent troops, equipment, and supplies north to reinforce the American armies in the Ardennes, and the offensive left it in dire straits.
By 15 January, Seventh Army's VI Corps was fighting on three sides in Alsace. With casualties mounting, and running short on replacements, tanks, ammunition, and supplies, Seventh Army was forced to withdraw to defensive positions on the south bank of the Moder River on 21 January. The German offensive drew to a close on 25 January. In the bitter, desperate fighting of Operation Nordwind, VI Corps, which had borne the brunt of the fighting, suffered a total of 14,716 casualties. The total for Seventh Army for January was 11,609. Total casualties included at least 9,000 wounded. First, Third and Seventh Armies suffered a total of 17,000 hospitalized from the cold.
While the German offensive had ground to a halt, they still controlled a dangerous salient in the Allied line. Patton's Third Army in the south, centered around Bastogne, would attack north, Montgomery's forces in the north would strike south, and the two forces planned to meet at Houffalize.
The temperature during January 1945 was extremely low. Weapons had to be maintained and truck engines run every half-hour to prevent their oil from congealing. The offensive went forward regardless.
Eisenhower wanted Montgomery to go on the counter offensive on 1 January, with the aim of meeting up with Patton's advancing Third Army and cutting off most of the attacking Germans, trapping them in a pocket. However, Montgomery, refusing to risk underprepared infantry in a snowstorm for a strategically unimportant area, did not launch the attack until 3 January, by which time substantial numbers of German troops had already managed to fall back successfully, but at the cost of losing most of their heavy equipment.
At the start of the offensive, the First and Third U.S. Armies were separated by about . American progress in the south was also restricted to about a kilometer a day. The majority of the German force executed a successful fighting withdrawal and escaped the battle area, although the fuel situation had become so dire that most of the German armor had to be abandoned. On 7 January 1945, Hitler agreed to withdraw all forces from the Ardennes, including the "SS Panzer" divisions, thus ending all offensive operations. However, considerable fighting went on for another 3 weeks; St. Vith was recaptured by the Americans on 23 January and the last German units participating in the offensive did not return to their start line until 25 January.
Winston Churchill, addressing the House of Commons following the Battle of the Bulge said, "This is undoubtedly the greatest American battle of the war and will, I believe, be regarded as an ever-famous American victory."
As the Ardennes battles began, Montgomery commanded of the American First and Ninth armies. This was approved by Eisenhower, as the northern armies had lost all communications with Bradley, who was based in Luxembourg. The northern side had lost all communications with the US command and with nearby units. Without radio or telephone communication Montgomery managed to improvise a way of communicating orders.
This change of leadership did not become known until a message was released.
Montgomery asked Churchill if he could explain the situation.