Obama said he was "100 per cent committed to the mission of Nasa and its future" and argued that space exploration would be best served by funding private companies to fly astronauts into space rather than continuing a government programme to send astronauts back to the moon.
"Nobody is more committed to manned space flight, the human exploration of space, than I am," Obama said. "But we've got to do it in a smart way; we can't keep doing the same old things as before.''
The White House plan says private companies should be funded to fly astronauts to the International Space Station, giving them almost $6 billion to build their own rockets and ships.
It also extends the space station's life by five years and puts billions into research to eventually develop new government rocket ships for future missions to a nearby asteroid, the moon, Martian moons or other points in space.
The plan had been attacked by former astronauts, including Neil Armstrong, the first person on the moon, because it would leave the country without a manned space flight programme while private companies develop spacecraft to carry astronauts.
"Without the skill and experience that actual spacecraft operation provides, the USA is far too likely to be on a long downhill slide to mediocrity,'' Armstrong wrote in an open letter, warning that US could be "relegated to second or even third rate stature" in the field of space exploration.
But Buzz Aldrin, Armstrong's Apollo 11 crewmate disagreed. "The steps we will be taking in following the president's direction will best position Nasa and other space agencies to ultimately send humans to Mars and other exciting destinations as quickly as possible,'' he said in a statement.
David Hilmers, a former astronaut, told Al Jazeera that the plan could yet be scuppered. "The devil is in the detail," he said, adding that any deep space exploration would need sustained investment over decades.
"It remains to be seen whether our determination to do so remains," he said.