Washington, Feb 27: US President Donald Trump will instruct federal agencies on Monday to assemble a budget for the coming fiscal year that includes sharp increases in Defence Department spending and drastic cuts to domestic agencies, according to administration officials.

A day before delivering a high-stakes address on Tuesday to a joint session of Congress, Trump will demand a budget with billions of dollars in reductions to the Environmental Protection Agency and State Department, according to the officials with direct knowledge of the plan.

Social safety net programmes, aside from the big entitlement programs for retirees, would also be hit hard, the New York Times reported.

The budget plan, a numerical sketch that will probably be substantially altered by House and Senate Republicans - and opposed by congressional Democrats - will be Trump's first big step into a legislative fray he has largely avoided during the first 40 days of his administration, according to the daily.

Treasury Secretary Steven Mnuchin on Sunday said that Trump's first budget would not touch Social Security or Medicare.

Trump's policy on entitlement reform is unclear, and his administration has not proposed a way to salvage Social Security and Medicare, the most expensive piece of the federal budget, or refuel trust funds expected to run dry in less than 20 years, The Hill magazine reported.

Instead, Trump's plan to pay down the nearly $20 trillion national debt rests on bolstering economic growth through tax cuts and deregulation.

Trump's team is also considering tax cuts without equivalent spending cuts, but insist lower corporate taxes will fuel domestic manufacturing and investment

The budget will predict 2.4 per cent growth in 2017, according to the New York Times. That is more than the 1.6 per cent former President Barack Obama's administration average but below the 4 per cent to 6 per cent growth Trump promised on the campaign trail.

Mnuchin said the administration would like to complete comprehensive tax reform by August, an ambitious goal given the jam-packed legislative calendar.

The White House and Congress will have to raise the debt ceiling around March 16 and fund the government by the end April 28.

Trump to boost military spending: Officials