President Barack Obama insisted on Monday that only government can jolt the economy out of deep recession and offered an olive branch to longtime foe Iran, scrapping years of past U.S. policies.

Taking his case directly to the recession-weary American people, Obama used his first White House news conference to exhort Congress to act in the coming week on an $800 billion economic stimulus package expected to help define his young presidency.

Obama, who won the White House on a promise of change after eight years of George W. Bush, signaled his intention to keep making clean breaks with the past on everything from the role of government to the wisdom of talking to the United States'' enemies.

"With the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life," the Democratic president said during a televised prime-time appearance in the East Room of the White House 20 days after his inauguration.

It was effectively a repudiation of Ronald Reagan''s "small government" legacy, a Republican doctrine Bush pushed for much of his tenure but which he was forced to abandon when aides urged massive intervention to prevent financial collapse.

Obama declared that a massive new government program was now needed without further delay to tackle what he termed "the most profound economic emergency since the Great Depression" and prevent a full-blown crisis from becoming a catastrophe.