Obama said in a statement the country faced a serious fiscal situation that stemmed from the recession he inherited from the Bush administration and years of failing to pay for new policies.
The statement came ahead of Obama's State of the Union address, due on Wednesday, in which aides say he will make deficit reduction a major theme.
China, the biggest U.S. foreign creditor, has been warning Washington to rein in the ballooning deficit. If the Obama administration fails to make headway, China and other creditors could demand higher rates for U.S. Treasury bonds.
Democratic Senator Kent Conrad and Republican Senator Judd Gregg have been pushing legislation that would establish a panel to make recommendations on cutting the U.S. budget deficit, which grew to $1.4 trillion in 2009.
If the commission were established, it would develop recommendations that would be put before Congress. Lawmakers would have to consider whether to adopt the recommendations in full or reject them.
But Conrad, chairman of the Senate Budget Committee, and Gregg, its ranking Republican, have been having trouble attracting enough support for the measure.
So, Obama's endorsement gives a crucial boost to their proposal before the Senate votes on it on Tuesday.
The measure had not been expected to pass, but Obama's statement could sway undecided senators, a senate aide said.
Obama has considered creating a commission by executive order, but some lawmakers say any panel on deficits should be created by Congress because of its role in controlling the purse strings.
Obama said he strongly supported the legislation under discussion in Congress and urged senators from both parties to vote for the creation of a statutory, bipartisan fiscal commission.
With tough choices made together, a commitment to pay for what we spend, and responsible stewardship of our economy, we will be able to lay the foundation for sustainable job creation and economic growth while restoring fiscal sustainability to our nation, he said.
Conrad welcomed Obama's statement of support.
Our statutory task force proposal provides the best chance for developing a truly bipartisan solution to this problem. We need both sides of the aisle committed to working together to confront the threat of runaway debt, he said.
Obama's approval ratings have fallen to 50 percent from 70 percent when he took office a year ago and his party suffered an embarrassing defeat this week in a Massachusetts Senate race.
Some analysts say public anxiety about skyrocketing deficits are one of the factors hurting the Democratic Party, which is worried about potential losses to Republicans in the November congressional elections.
(Reporting by Caren Bohan, Andy Sullivan, and Ross Colvin; Editing by Peter Cooney and Eric Walsh)