The move comes against the backdrop of the 2012 elections, where a central theme of the campaign for the Republican presidential nomination has been reducing government and limiting its influence over Americans.
In proposing to close down the US Commerce Department and merge six agencies, Obama could inoculate himself against Republican charges that he is a big-government liberal. Analysts were skeptical that Republicans in Congress would act on Obama's request in an election year.
Obama, in remarks at the White House, said the overhaul was needed to create "an effective lean government" and would make it easier for US businesses to get help to export their goods, a key part of his economic agenda ahead of the November vote.
"With this authority, we'd help businesses grow, save businesses time and save taxpayer dollars," he said, outlining his request for powers to reorganize the federal government.
Obama wants to fold together the Office of the US Trade Representative and five other export bodies now spread across Washington into a new, yet-to-be-named department, giving businesses a single point of contact and ensuring federal spending goes further to boost sales abroad.
Other parts of the Commerce Department would be absorbed into different federal agencies under the plan.
With US unemployment still high and the economy growing slowly, Obama is trying to boost US trade ties with developing markets such as Asia as a way to spur output.
He has set a goal of doubling US exports in five years — from $1.57 trillion in 2009 to $3.14 trillion by 2015.
Trade experts said having one agency in charge of exports should help.
"For the business community, engagement with overlapping agencies streamlined into a coherent process would be an advantage," said Nick Consonery of the Eurasia Group.
A White House official said the goal of streamlining the government was to save $3 billion over 10 years. It may also lead to the loss of 1,000 to 2,000 jobs through attrition, the official said.
