Obama is expected to promise a three-year freeze on non-discretionary spending in an effort to reign in the government's debt.

Disputed proposal

That has led to speculation that the president may be moving closer to the middle ground of American politics.

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"It's a centrist strategy going forward," Manu Raju of the Politico.com website, told Al Jazeera.

But aides have also signalled that Obama will make clear he has not lowered his sights and is determined to enact planned reforms, including his signature health care initiative, now in limbo in congress.

Ahead of his speech Obama has appeared on local television, saying: "The one thing I'm clear about is that I'd rather be a really good one-term president than a mediocre two-term president."

There is no guarantee that congress will agree to a spending freeze, an idea that Obama initially rejected when it was proposed by John McCain, his then Republican rival, in the 2008 election campaign.

The proposal has been met with derision by both Democrats and Republicans.

Democrats argue a freeze would hurt the economic recovery, while Republicans dismiss the move as window-dressing after what they call an "unprecedented spending binge" by the Obama White House.

Reform moves

According to the administration, the proposed freeze would exclude Defence, Veterans Affairs, Homeland Security and as well as entitlement programmes such as Medicare and Medicaid and Social Security, which  make up the biggest and fastest-growing part of the federal budget.

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White House budget officials estimate it could amount to savings of $250bn over 10 years.

But that would be less than 3 per cent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.

In his speech, Obama is also likely to touch on other initiatives including immigration reform, cap-and-trade global warming legislation, wide-ranging education reform and regulatory rules to halt risky business practices on Wall Street.

Also expected is a promise to improve national security in regard to bio-attacks, tax breaks that could ease the way to college or retirement for Americans and a framework for the US role in rebuilding earthquake-hit Haiti.