Defense Secretary Robert Gates said Thursday that unless Congress passes funding for the Iraq war within days, he will direct the Army and Marine Corps to begin developing plans to lay off employees and terminate contracts early next year.

Gates, who met with members of Congress on Wednesday, said that he does not have the money or the flexibility to move funding around to adequately cover the costs of the continuing operations in Iraq and Afghanistan.

"There is a misperception that this department can continue funding our troops in the field for an indefinite period of time through accounting maneuvers, that we can shuffle money around the department. This is a serious misconception," Gates told reporters at the Pentagon.

As a result, he said that he is faced with the undesirable task of preparing to cease operations at Army bases by mid-February, and lay off about 100,000 defense department employees and an equal number of civilian contractors. A month later, he said, similar moves would have to be made by the Marines.

Some members of Congress believe the Pentagon can switch enough money to cover the war accounts, Gates said. But he added that he only has the flexibility to transfer about $3.7 billion — which is just one week's worth of war expenses. Lawmakers, he said, may not understand how complicated and restrictive the situation is.

House Democrats said Thursday that the Pentagon may have to forgo a war spending bill this year because the lawmakers won't bankroll Iraq any further without tying the money to troop withdrawals.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said Thursday that if Congress is unable to pass legislation setting a timetable on the war, which is the most likely scenario, it will probably drop the issue until next year. Until then, Democrats say the Pentagon can eat into its $471 billion annual budget.

"The days of a free lunch are over," said Sen. Chuck Schumer, D-N.Y.

The war bill is part of a deepening conflict between the Democratic-controlled Congress and President Bush on the war and this year's spending priorities. Democrats say defense dollars should be used to bring troops home and repair the readiness of the armed forces, and more money should be directed to domestic projects.

The White House says Bush would veto the war spending bill because it sets an artificial timetable on combat.

The prospect of facing lean months ahead already has the Pentagon scrambling. Army Secretary Pete Geren told a Senate panel on Thursday that the service is considering how it would cover costs until Congress passes a war spending bill.

After mid-February, the Army would have to furlough civilian workers and freeze contracts, he said.

"A large organization such as ours cannot turn on a dime. ... It would have a dramatic effect," Geren said. The burden would "fall heavily on home-based troops and their families," he later added.

The House on Wednesday passed, 218-203, a $50 billion bill that would pay for the wars but require that troops start to leave Iraq in 30 days. It sets a goal of ending combat by December 2008, as well as interrogations standards that would make waterboarding illegal.

Bush is already on track to meet the requirement that troops start coming home, as he plans in coming weeks to slowly reverse this year's troop buildup of 30,000. But the White House says the measure would be detrimental to the war effort.

The bill "would only partially fund our troops in Iraq and Afghanistan, but fully embolden our enemies," White House spokeswoman Dana Perino said in a statement on Wednesday.

The measure goes to the Senate, where Democrats lack the 60 votes are needed to overcome procedural hurdles.

A Senate vote is expected before Sunday.