He said the move would allow the military to sustain for a year the increased troop level in Iraq ordered by the president in January.
Critics say the decision was a blow to the military, the troops and their families.
Ike Skelton, a Democrat who chairs the Armed Services Committee in the House of Representatives, said: "This new policy will be an additional burden to an already overstretched army.
Negative impact
"I think this will have a chilling effect on recruiting, retention and readiness. We also must not underestimate the enormous negative impact this will have on army families."
Gates admitted that "this decision will ask a lot of our army troops and their families".
The policy is effective immediately and also applies to units already in the region, he said.
There are about 145,000 US troops in Iraq and 25,000 in Afghanistan.
As part of George Bush's plan, the military is the midst of boosting its Iraq force by 28,000 combat and support troops.
The Pentagon's goal for active duty army troops is that they spend two years at home for every year deployed, but it has not been able to meet that target in recent years.
At the moment, army units average about a year at home for every year deployed, Pentagon officials say.
In an effort to tackle the strains on the military, Gates has ordered an increase in the size of both the army and the Marine Corps.