According to a transcript published by huffingtonpost.com, Obama had said: "So it's not surprising then, that they get bitter, they cling to guns or religion or antipathy to people who are not like them or anti-immigrant sentiment or anti-trade sentiment, as a way to explain their frustrations."
Hillary Clinton, Obama's rival and another presidential hopeful had strongly condemned Obama's comment.
Clinton said: "I was taken aback by the demeaning remarks Senator Obama made about people in small-town America."
"Senator Obama's remarks were elitist and out of touch. They are not reflective of the values and beliefs of Americans," said Clinton.
Steve Schmidt, advisor for Republican John McCain, had also reacted sharply to Obama's comments.
"It shows an elitism and condescension toward hard-working Americans that is nothing short of breathtaking," said Schmidt.
"It is hard to imagine someone running for president, who is out of touch with average Americans," said Schmidt.
Obama defended his comments till Friday, saying he was well aware of the strugles of the middle-class voters.
"No, I am in touch. I know exactly what's going on. People are fed-up," he had said.
However, due to wide criticism and condemnation, Obama had to concede on Saturday that his comments were indeed ill-chosen.
Both the Democratic hopefuls are engaged in a competition to win the support of working class voters by coming out against a pending agreement with Colombia and promising to renegotiate the North American Free Trade Agreement (NAFTA), if they became president.