But Mr Obama's Republican critics mocked his initiative as miniscule compared to a deficit tipped to hit at least US$1.7 trillion dollars in the fiscal year 2009, renewing warnings his spending plans will bankrupt future US generations.

'One hundred million dollars there, a 100 million dollars here, pretty soon even in Washington it adds up to real money,' Mr Obama said, though agreed with a reporter's proposition that the initial target was a 'drop in the bucket.'

The president, flanked by Secretary of State Hillary Clinton and Secretary of Defense Robert Gates, said he was proud of his cabinet which took office at a time of rare national financial peril.

'We have had to take some extraordinary steps in order to shore up our financial system and deal with an unprecedented economic crisis and as a consequence we have had to spend a significant amount of money,' Mr Obama said.

'That was the right thing to do,' he said, but argued that the cabinet had an obligation going forward to ensure every government dollar was spent wisely.

'I am asking for all of them to identify at least 100 million dollars in additional cuts to their administrative budgets,' Mr Obama said, calling for a total of 100 programmes to be cut. An administration official said that each agency would have to report their findings to the White House within 90 days.

The cabinet meeting came days after a string of 'Tea Party' demonstrations across the United States, which saw Obama critics claim the administration was busting hopes of future prosperity with high taxation and ballooning deficits.

'The administration's new talk of trimming a meager .0025 per cent from the 4 trillion dollar federal budget just doesn't square with its reckless record on borrowing and spending,' John Boehner, the top Republican in the House of Representatives said Monday. -- AFP