Obama also picked John Brennan, a 25-year CIA veteran as his counter-terrorism coordinator for the White House National Security Council.

Support despite concerns

If confirmed by the senate, Panetta, 70, a former congressman who served as White House chief of staff under Bill Clinton, the former US president, but who has no direct intelligence experience, would take over from Michael Hayden, the current CIA chief.

US media reported on Monday that Panetta is considered to have substantial foreign policy experience, having served in the White House and on the Iraq Study Group, the bi-partisan panel that examined the Iraq war and US policy.

Panetta was also director of the Office of Management and Budget and is currently director of the Panetta Institute for Public Policy at California State University.

A former commander of US forces in the Pacific from 1999 to 2002, Blair, 61, will be only the third Director of National Intelligence - a post created in 2004 after investigations into US intelligence services condemned the agencies for failing to share information that could have prevented the September 11 attacks on the US.

Blair, whose appointment must be confirmed by the US senate, is likely to face questions concerning the Indonesian military's 1999 killing of 200,000 East Timorese civilians that occurred during his time as head of US Pacific Command.

The East Timor and Indonesia Action Network, a human rights group, expressed concern this week over Blair's nomination.

Obama's top intelligence adviser during the campaign, Brennan withdrew from consideration for head of CIA in November amid criticism for his ties to Bush administration intelligence policies.

Formerly the interim director of the National Counterterrorism Center, Brennan had been criticised for his connections to CIA prisoner treatment policies. 

Obama's nomination of Panetta and Blair comes four days after their names were revealed by Democratic sources.