As Obama's team set a frenetic pace on his first full day in office, Hillary Clinton, the former New York senator and Obama's presidential rival, was confirmed as secretary of state by the US senate.
The president also met his senior team of economic advisers as he tries to implement an economic stimulus plan that could be worth more than $800bn.
Then, Obama was due to call in the Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, Robert Gates, the US defence secretary and other military advisers at a National Security Council meeting, including David Petraeus, his senior commander in the Middle East.
"The president is going to get an update about what is going on in Iraq," Robert Gibbs, Obama's spokesman, said.
"He will ask for planning to redeploy combat troops within 16 months."
Obama is to focus the US military's efforts on the battle against the Taliban in Afghanistan.
Washington is expected to move about 30,000 more soldiers to Afghanistan as forces are withdrawn from Iraq.
The Taliban, which has fought a bloody war with US and Nato forces since being pushed from power in 2001, said that Obama, should pull his troops out of the country and let Afghans decide their own fate.
"We have no problem with Obama ... [but] he must learn lessons from Bush and before that the Soviets," Yousuf Ahmadi, a spokesman for the movement told the AFP news agency.
Obama said the order on White House pay was necessary at a time when many in the US were facing economic troubles.
"During this period of economic emergency, families are tightening their belts, and so should Washington," Obama said.
As well as introducing tighter controls on lobbyists working in the White House, Obama also banned administration staff from receiving gifts from lobbyists.
Obama also introduced new rules designed to increase access to information about the presidency, meaning that he could no longer deny requests for information without the agreement of US government officials.
Obama has been under pressure to focus on the Middle East as Israeli forces withdrew from the Gaza Strip after an offensive that has left more than 1,300 Palestinians dead, nearly a third of them children, and more than 5,000 injured.
|Obama has signalled his involvement in
the Arab-Israeli conflict [Reuters]
Thirteen Israelis, including three civilians, also died in the 22-day offensive.
The new US leader acted quickly to telephone both Mahmoud Abbas, the Palestinian president, and Ehud Olmert, the Israeli prime minister.
"He used this opportunity on his first day in office to communicate his commitment to active engagement in pursuit of Arab-Israeli peace from the beginning of his term, and to express his hope for their continued cooperation and leadership," Gibbs said in a statement.
Obama had already issued a request that trials of al-Qaeda suspects held at Guantanamo Bay be halted for 120 days.
The trial of five suspects accused of planning the September 11 attacks was halted on Wednesday following the request.
Obama began work at the Oval Office early on Wednesday, despite only returning to the White House at 1am after touring at least 10 of the inaugural balls being held in his honour.
The former Illinois senator and his family had attended a prayer service at Washington's National Cathedral earlier in the day that marked the final part of the ceremonies for inauguration as president.