This is part of Washington's effort to persuade Khartoum to accept UN peacekeepers and stop the killing of civilians in Darfur.
President Bush signed the Darfur Peace and Accountability Act to deal with the crisis in the western region where at least 200,000 people have died and 2.5 million displaced in three years of fighting.
The act imposes sanctions against those responsible for genocide, backs measures to protect civilians and humanitarian operations and supports peace efforts in the devastated region, according to the order issued on Friday night by the White House.
The order continues a countrywide blocking of the Sudan government's property and prohibits transactions related to Sudan's oil sector.
"The government of Sudan continues to implement policies and actions that violate human rights, in particular with respect to the conflict in Darfur," Bush said in his order.
"The pervasive role played by the government of Sudan in Sudan's petroleum and petrochemical industries threatens US national security and foreign policy interests."
Bush's executive action expands on an earlier executive order issued in 1997 by Bill Clinton, then the US president.
The action taken on Friday maintains robust US sanctions on Sudan while facilitating US assistance and investment in the development and reconstruction of Southern Sudan.
About 2.5 million people have
been displaced by the fighting
UN investigators and rights groups have blamed the bulk of the atrocities on the Janjawid, a pro-government militia that is widely accused of killing villagers and setting fire to their homes. The government denies supporting the Janjawid.
Despite a May peace agreement, aid workers and rights organisations agree with the Crisis Group's assessment that violence has increased in recent months.
The UN Security Council voted in August to replace the weak African Union peacekeeping mission with a much bigger UN force. But Omar al-Bashir, Sudan's president, and his ruling National Congress party have refused to let the UN peacekeepers deploy, claiming they would breach Sudan's sovereignty.