Speaking at a school in Baltimore, the US president announces plans to cut the US federal deficit by $1.1tn (£686bn) over 10 years Reuters

Barack Obama has opened up a year-long battle with Congress after announcing a budget that proposes spending cuts in areas ranging from big, high-profile Pentagon projects to support for the inner-city poor.

The president's 204-page budget aims to cut $1.1tn (£686bn) over the next decade.

Launching his budget in a school in Maryland, Obama said the cuts would mean that by the middle of this decade domestic spending would be at its lowest point since the Eisenhower presidency of the 1950s.

"If we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," he said.

But Republicans, who have a majority in the House of Representatives, immediately rejected his budget, saying the cuts did not go deep enough. John Boehner, the Republican leader in the house, described the budget as "continuing the spending binge".

Obama's budget needs the approval of the house and the Senate, who will reshape it in the months ahead. The house has not passed this year's budget yet and Republicans this week plan to vote for $100bn (£62bn) in cuts in spending for the remaining seven months of the government fiscal year.

If the White House and Congress fail to resolve the crisis, the whole federal government could be closed down, as it did during a similar stand-off in the 1990s.

Obama said he would push ahead with infrastructure projects, research and development and investment in education. "But I'm also convinced that the only way we can make these investments in our future is if our government starts living within its means, if we start taking responsibility for our deficits," he said.

Obama said much of his saving will come from eliminating waste, such as getting rid of 14,000 office buildings that are no longer required.

Some of the proposed cuts are opposed by leftwing organisations, which Obama acknowledged. "It will mean cutting things that I care deeply about – for example, community action programmes in low-income neighbourhoods and towns, and community development block grants that so many of our cities and states rely on," he said.

The budget cuts are likely to dominate Obama's bid for re-election next year. The Tea Party's demands for deep budget cuts were a dominant theme in the mauling of the Democrats in November's midterm Congressional elections.

Obama's cuts will have only a marginal impact on the national debt, which stands at $14.1tn (£8.7tn). His 10-year deficit reduction would be less than the total projected deficit for 2011 alone, which the non-partisan Congressional Budget Office estimates will be $1.48tn (£923bn). The budget will not contain proposals to tackle areas of major spending in the US budget, such as social security.

The cuts would begin in October and extend over the next decade.

The military will not be subject to the same spending freeze as other government bodies but Obama is expected to follow defence secretary Robert Gates's proposal to slash spending at the Pentagon by $78bn (£49bn) over the next five years.

As well as savings from troop withdrawals from Iraq, some weapons programmes are also on the chopping block.