Mr Obama made climate change a key part of his election campaign
The US House of Representatives has passed a climate change bill aimed at reducing the country's emissions.
The legislation will put curbs on pollution and apply market principles to attempts to tackle global warming.
It was passed by a narrow margin of 219 votes to 212. President Barack Obama said the vote represented "enormous progress".
But the bill still has to be passed by the US Senate before it can become law, and it faces another tough fight.
"Today the House of Representatives took historic action with the passage of the American Clean Energy and Security Act," Mr Obama said after the vote.
"It's a bold and necessary step that holds the promise of creating new industries and millions of new jobs, decreasing our dangerous dependence on foreign oil."
Correspondents say the bill was passed after a long and heated session.
US CLIMATE BILL
Bill aims to cut emissions by 17% below the level in 2005 by 2020, then by 83% by 2050
Imposes national limits and requires polluters to acquire emissions permits
Permits are either free (85%) or bought at auction (15%)
Permits can be traded, allowing major polluters to offset surplus emissions
It seeks to cut emissions from 2005 levels by 17% by 2020, introduce a carbon trading system and and force a shift from fossil fuels to renewable sources.
Supporters say it will create a new "green" industry, boosting jobs and innovation, and reduce US dependence on foreign oil.
But opponents of the bill, both Republicans and Democrats, say it will lead to massive job losses in the US and impose greater taxes on every American.
Republican House Minority Leader John Boehner said energy costs would soar, and called the legislation "the biggest job-killing bill that has ever been on the floor of the House".
The battle now moves to the Senate, where correspondents say it will face a rough ride. It is not yet clear when the Senate might debate the bill.
The legislation has been widely supported by environmentalists but there are concerns that it will not go far enough towards addressing climate change.