US Defence Secretary Robert Gates has warned that the US military is in danger of running out of money for its operations in Iraq and Afghanistan.
Mr Gates said the Pentagon needed more money from Congress
He said Congressional funding for the wars was inadequate and budget constraints were undermining planning.
Congress this week approved $70bn (£35bn) - just half the sum that US President George W Bush had sought.
But Mr Gates also said many troops could be pulled out of Iraq as planned next year thanks to better security.
He raised the possibility of five combat brigades returning home by July next year, with the first unit due to leave this month.
'Fit and starts'
However he said during an end-of-year news conference: "Funding the war in fits and starts is requiring us to make short-term plans and short-term decisions."
The defence secretary said in September he hoped US troop levels might be reduced to 100,000 by the end of 2008.
There are currently almost 160,000 US troops in Iraq.
Asked whether he was still aiming for such a reduction, Mr Gates said he now regretted having used a specific number.
But he said he did expect to see a decrease in the number of brigade combat teams.
The current declared US plan is to cut these from 20 to 15 by the middle of next year, leaving troop levels in Iraq at approximately 130,000.
The deployment of 30,000 extra troops in the Baghdad area this year - the so-called surge strategy - has led to a lull in the violence.
Mr Gates said the improvement meant that Gen David Petraeus, the senior US commander in Iraq, could "decide to bring out the first five teams by July".
"The first of those is coming out this month. My hope has been that the circumstances on the ground will continue to improve," he added.
Mr Gates told reporters the challenge for next year would be "to sustain the gains we have achieved".
A vote in the US House of Representatives on Thursday completed congressional approval of the $70bn package for the war efforts in Iraq and Afghanistan for 2008.
Faced with a veto threat from Mr Bush, anti-war Democrats dropped efforts to link the funds to a timetable for a US troop withdrawal from Iraq.
The Democrats have tried time and again to impose a timetable for an Iraq pullout.