"Today, it appears that an agreement to prevent this New Year's tax hike is within sight, but it is not done," Mr Obama said at the White House. "There are still issues left to resolve, but we're hopeful that Congress can get it done, but it's not done."
Any agreement to deal with automatic spending cuts for the middle-class Americans must be balanced, Obama added.
If the deal is done, sources say, it would extend unemployment benefits for a year; child, college tax credits for five years; and earned income tax credit for five years.
Hundreds of billions in tax increases and automatic spending cuts come into effect in the United States from today.
The tax increases are the biggest ever to hit Americans at one go.
Here are five facts on what 'fiscal cliff' is all about:
1. The low tax rate regime enacted under Republican President George W Bush on a temporary basis and extended in 2010 under the Obama administration expired at midnight starting January 1.
This will have an impact on ordinary working Americans who will have to pay about 2 per cent more in income tax. The taxes on an individual's investment will also get increased, which includes capital gains and dividends.
The New Year sees the return of caps on personal exemptions and itemised deductions for upper-income taxpayers. All this had come to an end during Bush era.
2. More than two million unemployed Americans won't be receiving the US government's unemployment insurance. Figures suggest that about two lakh of these unemployed reside in New York. The US unemployment rate stood at 7.7 per cent in November, according to Labor Department figures, and if the economy slips into a recession, the rate is expected to stand at a very worrying 9.1 per cent.
3. Avoiding a fiscal cliff means extending the Bush-era tax cuts. Mr. Obama is not expected to budge on this as far as imposing of higher taxes on rich Americans is concerned. Even if the rich are taxed more, fiscal cliff can be avoided by just extending Bush-era tax cuts for some months, if not all through 2013.
4. Americans blame the Republicans, who are the opposition in the US Congress, more than the Democrats (led by President Barack Obama) for the "fiscal cliff" crisis, a Reuters poll has shown.
When asked who they believed to be more responsible for the fiscal cliff situation, 27 per cent blamed Republicans in Congress, 16 per cent blamed Obama and 6 per cent pointed to Democrats in Congress. The largest percentage - 31 percent - blamed "all of the above".
On the positive side, 67 per cent of Americans polled in the online survey said the impending fiscal cliff was not affecting their holiday spending.
5. Lawmakers are now looking at the period immediately after the January 1 deadline to come up with a retroactive fix to alleviate the impact of the return to higher tax regime.
With inputs from agencies