In his first public appearance at the White House, Mr Obama delivered what amounted to a stinging indictment of his predecessor, stating that Americans would welcome “a moment of great change in America, a time for reinvigorating our democracy and remaking our country”.
He demanded “a clean break from business as usual” and vowed to “close the revolving door that lets lobbyists come into government freely and lets them use their time in public service as a way to promote their own interests”.
New rules, he said, were needed to “restore that faith in government” essential to bringing about a major transformation. He was determined “to make government trustworthy in the eyes of the American people” again.
Former President George W. Bush’s Republican party was plagued by scandals involving lobbyists and influence peddling during the past eight years while Mr Obama’s own Democratic party has also been implicated in corruption schemes.
“Public service is a privilege,” Mr Obama told members of his staff at a swearing in ceremony. “It’s not about advantaging yourself. It’s not about advancing your friends or your corporate clients. It’s not about advancing an ideological agenda or the special interests of any organisation.”
The new rules will ban aides from trying to influence the Obama administration for two years after they leave his staff. New officials will also be banned from working on subjects they have previously lobbied on.
Mr Obama said he would also ban lobbyists from giving presents to any members of his administration. All his staff will be required to attend an ethics briefing as part of the new rules he described as tighter “than under any other administration in history”.
The new president also pledged to uphold “a new standard of openness” in government.
“For a long time now there’s been too much secrecy in this city. The old rules said that if there was a defensible argument for not disclosing something to the American people, then it should not be disclosed. That era is now over.”
Mr Obama, who is taking office during the gravest economic crisis since the Great Depression of the 1930s, said that all his staff who earned more than $100,000 (£73,000) would have their pay frozen.
“During this period of economic emergency, families are tightening their belts, and so should Washington. That’s why I am instituting a pay freeze on the salaries of my senior White House staff.
“Some of the people in this room will be affected by the pay freeze, and I want you to know that I appreciate your willingness to agree to it.”
In the afternoon, the new president and first lady Michelle Obama welcomed 100 local people for an “open house” at the White House, shaking the hands of guests in the blue room.
The president thanked people for coming to visit and told them enjoy themselves. He even joked that they should roam around, but just be careful not to break anything.
Vice-President Joe Biden and his wife, Jill, received children from 10 local schools to their official residence.