(Corrects to change million to billion in 7th para reference, to $196 billion Bush requested)

By Caren Bohan and Susan Cornwell

WASHINGTON, Nov 29 (Reuters) - U.S. President George W. Bush on Thursday stepped up pressure on lawmakers to pass his Iraq war funding request, while a senior Democrat said a deal might be possible.

During a visit to the Pentagon, Bush said delays in approving his $196 billion request for the Iraq and Afghanistan wars during the fiscal year that began Oct. 1 would force cuts in military base operations across the United States.

He said Defense Secretary Robert Gates has directed the Army and Marine Corps to make plans to lay off civilian employees, end contracts and "prepare our military bases across the country for reduced operations."

But the Democratic chairman of the House defense spending panel, Rep. John Murtha, said he thought a compromise was possible after a telephone conversation with Lt. Gen. Douglas Lute, the White House point person in charge of Iraq policy.

"I told him we need to make a deal," Murtha said. "In listening to him, I'm more optimistic that there is a possibility" of agreement.

The Pennsylvania lawmaker, who is close to House of Representatives Speaker Nancy Pelosi, said the Democratic leadership "might be willing to compromise" on a troop pullout timeline proposed by congressional Democrats.

The Democrats have offered to pass $50 billion of the $196 billion Bush requested, but with a requirement that most U.S. troops leave Iraq by December 2008.

Although Democrats hold majorities in both chambers of Congress, they lack enough votes in the Senate to keep Republicans from blocking a bill with a troop pullout plan.

Bush says he will veto any legislation that attaches such conditions to the funding. He has repeatedly called on lawmakers to pass war funds before the end of this year.

"I asked Congress to provide this essential funding to our troops before the members leave on their Christmas vacation," Bush said.

Democrats have insisted they will not give Bush a "blank check" for the war.

The Pentagon warned last week that the Army would run out of money in mid-February followed by the Marine Corps a month later if Congress did not approve the war funding.

Democrats accuse the administration of using scare tactics and peddling "horror stories" to pressure Congress to give the administration the war funds without conditions.

"We cannot stay in Iraq forever. The president should accept these conditions and come up with a responsible plan to bring our troops home," said David Obey, a Wisconsin Democrat who chairs the House Appropriations Committee. (Additional reporting by Matt Spetalnick)

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