Gates, in a compromise with the White House, said the 78 billion dollars in cuts and other measures would result in a slower pace of growth in defense budgets over the next five years, despite earlier plans to keep spending at a higher rate.

The proposed cuts will require reducing the size of the Army and the Marine Corps in 2015-16, with the Army reducing its force by 27,000 troops and the Marines by 15-20,000, he told a news conference.

The US Army and Marines have not faced reductions since the post-Cold War cuts in defense spending in the 1990s, and the size of the ground force -- unlike the Air Force and Navy -- has expanded since the attacks of September 11, 2001.

The decision reflected the shifting political climate in Washington, with the spotlight on the government's deficit overshadowing a long-running focus on national security after 2001.

The Pentagon chief said he would have preferred to avoid such cuts, "but this country's dire fiscal situation and the threat it poses to American influence and credibility around the world will only get worse unless the US government gets its finances in order."

As a major portion of the US budget, "the Pentagon cannot presume to exempt itself from the scrutiny and pressure faced by the rest of our government" to scale back spending, he said.

Some Republican leaders in Congress promptly criticized the proposed budget as a threat to the military's health, while some budget hawks have argued for much deeper cuts in defense spending.

Gates said the Pentagon needed to steer a middle course without dramatic cuts, but insisted the bureaucracy had to change the way it operated.

"This department simply cannot risk continuing down the same path -- where our investment priorities, bureaucratic habits, and lax attitudes towards costs are increasingly divorced from the real threats of today, the growing perils of tomorrow, and the nation's grim financial outlook," he said.

Despite talk of fiscal constraints, the vast American defense budget still far exceeds other countries and comes as European allies face drastic cutbacks to core military programs.

Gates had hoped to avoid any cuts that directly affected the fighting force but said the reductions in the Army and Marine Corps will not come until 2015 -- when Washington hopes Afghan forces will take over responsibility for their country's security.

The Army is currently at 569,000 troops, after a temporary increase of an additional 22,000 troops, and the Marine Corps has about 202,000 personnel.

The proposed defense budget for fiscal year 2012 will reach 553 billion dollars, growing at a modest rate of three percent, he said. But future budgets will gradually be scaled back to zero real growth in 2015 and 2016, Gates said.

Gates, mindful of a growing push to rein in the country's deficit and national debt, has for months signaled plans to find tens of billions in savings in the defense budget with the aim of preserving key military programs.

The department found 150 billion dollars in savings that were meant to be plowed back into the defense budget, but the White House demanded a cut of 78 billion in military spending over the next five years.

The Pentagon used savings in overhead costs of 54 billion dollars to meet the White House request, but Gates still had to find an additional 24 billion.

The additional savings were found by adjusting economic forecasts for budgets in coming years, streamlining plans for the F-35 fighter and cutting the Army and Marine Corps, he said.

Gates confirmed that the cuts included cancelling an amphibious landing craft favored by the US Marine Corps, the Expeditionary Fighting Vehicle, which he said had been plagued by repeated delays and rising costs.

Apart from cancelling the amphibious craft, Gates also proposed changes in the costly F-35 fighter jet program, putting the troubled Marine version of the aircraft on a two-year "probation" to resolve persistent technical problems.

For more cost savings, Gates proposed streamlining the Defense Department's "sprawling intelligence apparatus," maintaining a freeze on hiring civilians for three years, eliminating more than 100 general and senior officer positions and scrapping nearly 400 internal reports.

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