The Times reported that the US Defense Department is scrambling to find areas that can be cut, with the Air Force and Navy likely to lose as much as five billion dollars each in 2006.

Sources told the daily that White House and Pentagon officials tangled last week over a proposed cut of 60 billion dollars over the next six years.

The move would signal an end to the George W. Bush administration's massive defense buildup following the September 11, 2001 attacks, and comes just weeks before the president submits his 2006 budget to Congress.

Treasury Secretary John Snow said the new budget would call for sizeable cuts, but declined to say which parts of government would be affected.

"I don't want to forecast the new budget, which will be out soon, but there will be actual cuts in many programs as a result of this year's budget proposal," Snow told CNN.

"I'm going to wait until we bring the budget out to have the details. But everything is being looked at and put under the microscope."

The White House move to reduce Pentagon spending comes amid rising US budget deficits and growing costs for the Iraq war, currently at about 4.4 billion dollars a month.

The cuts would not affect military operations in Iraq and Afghanistan however, which are financed by separate emergency allocations.

The Pentagon reportedly is at work on the latest such supplemental war budget to present to the US Congress in 2005, which could total as much as 80 billion dollars, according to the daily.

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