No costs given
"We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s," Obama said.
He said that if individual states do not use the money allocated to them for infrastructure projects, the funds will be withdrawn by the federal government, Obama said.
"If a state doesn't act quickly to invest in roads and bridges in their communities, they'll lose the money," he said.
However, he did not say how much his plan will cost.
James Galbraith, an economist who served as the executive director of the Joint Economic Committee, told Al Jazeera that Obama's plan could cost the US taxpayer over a trillion dollars to have an effect.
"I think Obama stated the principle very clearly, which is that the only way out of this slump is for the public sector to step in and take action. It is going to have to be action on a very substantial scale," he said.
"We are not going to be spending [all] one trillion dollars on infrastructure. As part of a package that has a trillion dollars in it, you have got to help the states and cities, you have to do something to stabilise the housing crisis, you have probably got to put soemthing in the pot for elderly people, you've probably got to give working people substantial tax relief."
As part of his plan, Obama sais efforts should be made to refurbish school buildings, making them more energy-efficient and equipping them with computers.
"To help our children compete in a 21st-century economy, we need to send them to 21st-century schools," he said.
Obama also said his administration would work to increase the accessibility of broadband internet connections across the United States.
"It is unacceptable that the United States ranks 15th in the world in broadband adoption," he said.
|Unemployment claims are rocketing as the US recession continues to bite [AFP]
"Here, in the country that invented the internet, every child should have the chance to get online, and they'll get that chance when I'm president - because that's how we'll strengthen America's competitiveness in the world."
The president-elect said it was important to ensure that hospitals and clinics receive broadband connections to speed the transfer of patient records.
Public buildings will also receive more energy-efficient heating systems and energy-saving light bulbs, Obama said.
"Our government now pays the highest energy bill in the world. We need to change that," he said.
The president-elect's address comes days after the National Bureau of Economic Research said that the US was in a recession.
Obama said his plan will be submitted to congress soon after he is inaugurated as US president on January 20.
"We need to act with the urgency this moment demands to save or create at least two-and-a-half million jobs so that the nearly two million Americans who lost them know that they have a future."
The scheme is designed to quash excess spending and reduce "our dependence on oil … saving billions of dollars," Obama said.