The figure, released in the White House's mid-session budget review, is well above the 2003 shortfall of $374 billion, the previous record in dollar terms. But it is $76 billion less than the $521 billion forecast for this year by the White House in February.

A top official from the nonpartisan Congressional Budget office said recently that CBO is expecting a shortfall of less than $450 billion for the fiscal year, which ends on Sept 30.

The Bush administration also revised up its projections for the economy from February's forecasts, saying it expected real gross domestic product growth of 4.7 per cent this year, slowing to 3.7 percent in 2005. The White House in February forecast 2004 growth of 4.4 percent and 3.6 percent next year.

It now expects an average unemployment rate of 5.5 percent in 2004, down from a 5.6 percent prior estimate, and it saw this rate declining to 5.3 percent next year.

The projections of faster GDP growth this year came just hours after the government said real GDP slowed to an annualised growth rate of 3.0 percent in the second quarter, from 4.5 percent in the first three months of 2004 after consumer spending growth dipped amid high energy prices.