Amid a struggling economy and waning popularity, the US president says: "We have to recognise that we face more than a deficit of dollars right now. We face a deficit of trust – deep and corrosive doubts about how Washington works that have been growing for years.
"To close that credibility gap we must take action on both ends of Pennsylvania Avenue to end the outsized influence of lobbyists; to do our work openly; and to give our people the government they deserve."
Obama is expected to promise a three-year freeze on non-discretionary spending in an effort to rein in the government's debt.
That has led to speculation that the president may be moving closer to the middle ground of American politics.
"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 healthcare 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."
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.