"We had a good meeting down at the White House."
The two men said they would try to have a recommendation within 48 hours, one day ahead of the deadline.
If the leaders cannot reach a compromise on their own, Obama called for an "up-or-down vote" on his proposal that would allow taxes to rise only for those earning more than US$250,000 ($305,000) a year, extend unemployment benefits and halt some of the most drastic spending cuts.
"We're now at the last minute," Obama said. "The American people are not going to have any patience for a politically self-inflicted wound to our economy."
Obama earlier met congressional leaders from both parties at the White House for more than an hour, described as "constructive" by the senators and the President.
If the Democrats and Republicans cannot come to an agreement to replace the looming austerity and tax measures with a more measured approach, taxes would increase for most US citizens and severe Government spending cuts would take effect in the new year in what economists have said would be a major blow to the US economy.
Obama and US House of Representatives Speaker John Boehner have been in talks for weeks to hammer out a deal.
The discussions came to an impasse over taxes, with Obama seeking an increased levy on the wealthiest people and Boehner refusing to raise taxes on those earning less than US$1m a year.
The fiscal cliff refers to the expiration of all tax cuts implemented under former President George W Bush coupled with across-the-board spending cuts.
Approved in August last year during a bitter partisan stand-off on raising the debt ceiling, it was designed to force both sides to reach agreement on deficit reduction measures.
- AAP
