(Adds Hoyer to introduce legislation soon)

By Caren Bohan

WASHINGTON, June 9 (Reuters) - President Barack Obama sought on Tuesday to show he was serious about improving the U.S. budget picture as he called on Congress to pass new limits on tax cuts and spending programs to avoid adding to deficits.

Obama urged passage of "pay-as-you-go" legislation that would require any new tax cut or automatic spending program to be paid for within the budget.

"The 'pay as you go' principle is very simple. Congress can only spend a dollar if it saves a dollar elsewhere," Obama said in a speech at the White House attended by several Democratic members of Congress.

"Entitlement increases and tax cuts need to be paid for. They are not free," said Obama, who has been criticized by Republicans for proposing a hefty domestic agenda that includes overhauling the health care system, bolstering education and tackling global climate change.

The White House has forecast a budget deficit for this year of $1.84 trillion, or 12.9 percent of gross domestic product.

Republicans have warned that programs such as the proposed health care plan would add to the budget deficit for years to come and have also criticized Obama's $787 billion stimulus plan, which was passed by Congress in February.

Obama contends that much of the budget deficit was inherited from the Bush administration, which presided over a shift from record surpluses to huge increases in the deficit fueled by the financial crisis and spending for the Iraq war.