Obama appoints Chief of Staff

US President Barack Obama has chosen JP Morgan Chase executive William Daley to be his new White House Chief of Staff as part of a major retooling of his team.

By picking Daley, Obama is bringing in an outsider who was not part of his original inner circle and someone who has deep business experience at a time when fixing the US economy is Obama's greatest challenge ahead of his 2012 re-election bid.

Daley's choice, along with the expected selection of Treasury Department official Gene Sperling as a senior economic adviser, would mean a return to the White House of experienced hands from their days working for Democratic President Bill Clinton, who presided over a growing economy.

"He possesses a deep understanding of how jobs are created and how to grow our economy," Obama said of Daley.

Current Chief of Staff Pete Rouse, a long-time Obama adviser who relishes a behind-the-scenes role, is being moved to the senior advisory position of Counselor to the President.

Obama is conducting a shakeup of his White House staff to prepare for the next two years of divided government - with Republicans now in control of the US House of Representatives -and to lay the groundwork for his 2012 re-election campaign.

Daley, who was Clinton's commerce secretary, met Obama and other officials at the White House on Wednesday to discuss the job.