"Across the board, we are slowly tightening the noose on Gaddafi," Obama said at a White House news conference, which was dominated by the Libyan uprising and the Japanese tsunami tragedy.
In his first indication of a US tilt towards Libyan opposition, Obama said he would appoint an envoy to Libyan opposition forces as part of efforts to "change" the balance of the military situation in the war-torn country.
He also said that the US had broached the issue of enforcing the no-fly zone with regional powers and steps would be taken after consultations.
Defending his call to oust Gaddafi, the President said, "he (Gaddafi) is more and more isolated internationally both through sanctions as well as an arms embargo."
Expressing concern over Gaddafi targeting civilians, the US president said, "I'm concerned. Gaddafi has stash of weapons and some troops that remain loyal to him and there have been reports that he''s also been hiring mercenaries."
"We are going to have to apply pressure," Obama said, vowing that efforts have to be made to change the balance militarily on the ground in Libya as well as in Gaddafi's inner circle," he added.
Hours after his speech, the US Treasury Department slapped sanctions against Gaddafi's wife, children and his closest advisers.
Those whose assets were frozen included his wife Safia Farkash, and several of his children: Hannibal Gaddafi who is the head of General Maritime Transport Company of Libya; Saadi Gaddafi - the Commander of Special Forces; Muhammad Gaddafi who is the Chairman of Libyan Olympic Committee and Chairman of the General Post and Telecommunications Company; and his favourite son Saif Al-Arab Gaddafi.
The senior officials include Abu Bakr Yunis Jabir -- Libya''s Minister of Defence; Matuq Mohammad Matuq -- Secretary General of the People''s Committee for Public Works; Abu Zayd Umar Dorda -- Director of Libya''s External Security Organization and Abdullah Al-Senussi who is Director of Military Intelligence.
Under earlier set of sanctions, Washington had frozen US 32 billion of Libyan assets. The President did not disclosed whether the US and its allies would go ahead to arm the rebels as has been demanded by the Libyan opposition leaders.
"We have determined that it's appropriate for us to assign a representative to interact with the opposition and determine ways that we can further help them," Obama said.
Secretary of State Hillay Clinton on Monday will meet rebel representative in Paris Mahmoud Jibril, the head of foreign affairs in the National Council.