The US advisers would be deputed to Iraq to "assess how we can best train, advise and support Iraqi security forces" in the face of advancing Sunni fighters of the Islamic State in Iraq and Syria (ISIS), he said Thursday.
But "armed forces will not be returning to combat in Iraq", Obama said in a White House announcement after a meeting with his national security team on options that also include the possibility of future air strikes.
Obama also announced a series of steps designed to improve intelligence, surveillance and reconnaissance of the militant army that has taken several Iraqi cities and is threatening the capital in Baghdad.
The president also announced that he will dispatch Secretary of State John Kerry to the region for diplomatic efforts that include demands for a more inclusive government in Iraq.
Asked about some allies call for removal of Prime Minister Nouri al-Maliki, Obama told reporters that "it's not our job to choose Iraq's leaders".
US is prepared to send up to 300 military advisers to Iraq, said Obama
In addition to military advisers, Obama said he is planning to create "joint operation centres" with the Iraqi military to help coordinate plans and designate possible targets among the militants.
While the US has an interest in preventing civil war in Iraq and making sure it does not become a new haven for terrorists planning to attack the US and its allies, Obama said ultimately it's up to Iraq to solve its problems, .
The advisers will not be combat troops, and "I think we always have to guard against mission creep", Obama said.