U.S. President Barack Obama sat down for talks with top U.S. lawmakers on Friday to seek compromise on avoiding the looming "fiscal cliff", a combination of tax hikes and spending cuts which could tip the U.S. economy back into recession.

During the meeting with congressional leaders, Obama said they are all aware that they have some "urgent business to do" to break political impasse on how to head off the "fiscal cliff" - sweeping tax increases and automatic spending cuts which are scheduled to take effect in January 2013.

"We've got to make sure that taxes don't go up on middle-class families, that our economy remains strong, that we're creating jobs, and that's an agenda that Democrats and Republicans and independents, people all across the country share," he said.

Obama repeated his position that the deficit should be reduced in a balanced way with both rising tax revenues and spending cuts.

"My hope is that this is going to be the beginning of a fruitful process where we're able to come to an agreement that will reduce our deficit in a balanced way, that we will deal with some of these long-term impediments to growth and we're also going to be focusing on making sure that middle class families are able to get ahead," he said.

After the meeting, congressional leaders talked to reporters for a short time outside the West Wing of the White House.

"I outlined a framework that deals with reforming our tax code and reforming spending. I believe that the framework that I outlined...is consistent with the President's call for a fair and balanced approach," House Speaker John Boehner told the reporters.

"I felt very good about what we were able to talk about in there. We have the cornerstones of being able to work something out," said Senate Majority Leader Harry Reid.

House Minority Leader Nancy Pelosi said the there should be a deadline for the compromise. "We should show some milestones of success so that confidence can build as we reach our solution," she added.

Mitch McConnell, the most powerful Republican in the Senate, said "we fully understand that you can't save the country until you have entitlement programs that fit the demographics of changing America in the coming years."

"We're prepared to put revenue on the table provided we fix the real problems," he noted, insisting that the fiscal dilemma was due to too much government spending, but not too little taxes.