* Problem not budget levels but method of imposing cuts
* Reductions hit training for soldiers, pilot flight hours
* 'We're tapped out,' Admiral Greenert tells Senate panel
WASHINGTON, Nov 7 (Reuters) - The top U.S. military officers said on Thursday that across-the-board cuts in defense spending have seriously eroded American forces' preparedness for war, and another round of reductions in the coming months will wreak even more havoc.
To quickly achieve the abrupt cuts that went into force in March, U.S. military chiefs slashed big-unit training for soldiers, curbed flying time for pilots and canceled regularly scheduled maintenance for ships. A similar round of reductions in January would lead to more of the same.
"This is the lowest readiness level I've seen within our army since I've been serving for the last 37 years," General Ray Odierno, the Army chief of staff, told a Senate hearing. "I believe our challenge is much greater today than it has been since I've been in the Army."
Odierno has said only two of the Army's brigade combat teams in the United States have received the full training they would need to go to war. Even those in Afghanistan have undergone training just to advise and assist local forces, rather than training for combined forces combat they might face elsewhere, he said.
The readiness drop comes as the military is grappling with a huge cutback in defense spending following a decade of growth due to the wars in Iraq and Afghanistan. With the Iraq war over and the Afghanistan conflict winding down, the Pentagon has been told to pare its spending plans by $487 billion over a decade.
Congress and the White House, struggling to curb the massive U.S. deficit, also directed the Pentagon to slash an additional $500 billion in spending over a decade unless lawmakers could agree on alternative budget cuts and revenue increases.
No deal was reached, and the across-the-board reductions went into effect in March for the first time.
Lawrence Korb, a defense analyst at the Center for American Progress, said the issue was not Pentagon base funding levels - about $500 billion in the fiscal year that started on Oct. 1 - but the inflexible mechanism "that requires them to cut all items in the budget, other than military personnel, by an equal amount."
The military chiefs, testifying before the Senate Armed Services Committee, appealed for more flexibility to deal with the reductions, saying they could cope with the $1.3 billion in cuts if they had additional time.
"Sequestration reduces our capability and capacity over time, but it doesn't break us," said General Mark Welsh, the Air Force chief of staff. "The mechanism is what breaks us."
Admiral Jonathan Greenert, the chief of naval operations, told lawmakers the Navy tried to keep two aircraft carrier strike groups deployed overseas and a third one in the United States fully trained and ready to respond to emergencies.
The cuts make that increasingly difficult to do. The Navy has a carrier strike group in the Gulf and another in the western Pacific. The carrier intended for emergency responses has been in the eastern Mediterranean as a result of concerns about Syria's chemical weapons use.
"Consequently, because of fiscal limitations and the situation we're in, we don't have another strike group trained and ready to respond on short notice in case of a contingency," Greenert told lawmakers. "We're tapped out."
Further across-the-board cuts will force the Navy to halt the planned purchase of a Virginia-class submarine, a littoral combat ship and forward staging base ship, he said. The Navy also would have to stop plans to buy 11 tactical aircraft.
General Mark Welsh, the Air Force chief of staff, said further cuts in 2014 would force the Air Force to curb flying hours to the point where within three or four months, many units "won't be able to maintain full mission readiness."