Obama defended drone strikes, saying they "have saved lives" by eliminating terrorists, and are a legal part of a "just war" against their organisations.
There have been civilian casualties that "haunt" him, Obama said, but that risk must be balanced against the threat from terrorist groups that are specifically targeting civilians.
"Doing nothing is not an option," he said.
"We are at war with an organisation that right now would kill as many Americans as they could if we did not stop them first," he said in Thursday's address at the NationalDefenceUniversity in Washington, DC.
"So this is a just war -- a war waged proportionally, in last resort, and in self-defence."
The armed drone has become the signature weapon in America's "war on terror". But their use raises a variety of complex legal and ethical issues, quite apart from practical arguments as to whether the drone strikes themselves are effective.
In a sweeping speech, Obama also outlined new rules or overseas drone strikes and revamped efforts to close the prison at GuantanamoBay.
Obama sought to reframe his counterterrorism strategy saying that "America is at a crossroads."
"We must define the nature and scope of this struggle, or else it will define us, mindful of James Madison's warning that 'No nation could preserve its freedom in the midst of continual warfare.' Neither I, nor any president, can promise the total defeat of terror," he said.
"We must define our effort not as a boundless 'global war on terror' -- but rather as a series of persistent, targeted efforts to dismantle specific networks of violent extremists that threaten America. In many cases, this will involve partnerships with other countries."
The president discussed Afghanistan, Benghazi, and ongoing investigations of national security news leaks, while questioning the concept of the "global war on terror" that has prevailed since the September 11 attacks.
Under a new set of rules he signed this week, Obama said drone attacks will be confined to known terrorists. "Before any strike is taken," he said, "there must be near-certainty that no civilians will be killed or injured -- the highest standard we can set."
On Guantanamo, Obama said he is lifting the moratorium on detainee transfers to Yemen that he imposed in 2010 after it was revealed that Detroit 'underwear bomber' Umar Farouq Abdulmuttalab was trained in Yemen.
He said he would appoint a new envoy at the State Department and an official at the Defence Department who will attempt to negotiate transfers of Guantanamo detainees to other countries. And he said he is lifting the moratorium on some detainee transfers.
Obama had pledged to close the facility during his first year in office. But his efforts ran afoul of congressional Republicans who opposed trials of terrorism suspects in the United States, and of other countries that refused to take some prisoners.
Some detainees at the prison, meanwhile, are in the midst of a hunger strike, protesting their conditions.
In his speech, Obama called on Congress to lift some of those restrictions, and to establish a facility in the United States for detention and military trials of some Gitmo suspects.
Image: US President Barack Obama speaks at the National Defence University in Washington, DC on Thursday
Photograph: Win McNamee/Getty Images
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