US President Barack Obama Tuesday staked his second term political capital on a full-bore drive to cut gun crime, reform the immigration system and to ignite economic growth and job creation.

In his annual State of the Union address, Obama referred only in passing to tense nuclear showdowns with North Korea and Iran, but in keeping with an inward looking address, pledged to bring half of US troops in Afghanistan home in a year.

Grasping for a note of optimism in still grim economic times, Obama recalled how in his first term, America had rebounded from the worst economic crisis in generations, before delivering a speech packed with policy initiatives.

"Together, we have cleared away the rubble of crisis, and can say with renewed confidence that the state of our union is stronger," Obama said, in a speech punctuated by raucous cheers in the House of Representatives.

The address was Obama's best chance to speak directly to Americans to build support for his plans after his November election win, as he seeks to stave off the domestic lame duck status that eventually hits all second term presidents.

Obama said America's key task was working to stabilize its budget, and said looming automatic spending cuts due to hit in March which could throw the economy into chaos and increase unemployment were "a really bad idea."

"A growing economy that creates good, middle-class jobs -- that must be the North Star that guides our efforts," Obama said.

"It is our generation's task, then, to reignite the true engine of America's economic growth -- a rising, thriving middle class."

Obama turned only briefly to foreign policy, saying North Korea's nuclear test earlier on Tuesday would only isolate the Stalinist state further, in toned down language apparently designed to deprive Pyongyang of attention.

He did promise to stand by America's Asian allies, "strengthen our own missile defense, and lead the world in taking firm action in response to these threats."

Ahead of new nuclear talks between world powers and Tehran this month, Obama said the "leaders of Iran must recognize that now is the time for a diplomatic solution" and said a global coalition was united against the Islamic Republic.

Breaking new foreign policy ground, Obama announced the formal beginning of talks between the United States and Europe on a trans-Atlantic trade pact and previewed a new plan to thwart cyber attacks on US infrastructure.

The US president, criticized for doing too little as nearly 70,000 people have died in civil war in Syria vowed to keep up pressure on the Assad regime and said he would stand firm in defense of Israel, which he will visit next month.

Obama, in line with his core mission of ending a draining decade of foreign wars, announced the return of 34,000 of the 66,000 US troops remaining in Afghanistan by next February, ahead of a full withdrawal in 2014.

"This drawdown will continue. And by the end of next year, our war in Afghanistan will be over," he said.

Obama also called on Congress to act finally on climate change, hitting out at those who deny global warming.

"We can choose to believe in the overwhelming judgment of science -- and act before it's too late," Obama said.

In line with a long-time policy goal, Obama said former Cold War foes Russia and the United States should join to further reduce nuclear arsenals.

Domestically, Obama said he wanted a bill to reform America's broken immigration system to give illegal immigrants a path to citizenship within months.

And he was at his most impassioned as he made a case to a tough audience in Congress for more efforts to crack down on gun violence, following the killings of 20 kids at a Connecticut elementary school in December.

"If you want to vote no, that's your choice," Obama told lawmakers.

"But these proposals deserve a vote.

"Because in the two months since Newtown, more than a thousand birthdays, graduations, and anniversaries have been stolen from our lives by a bullet from a gun."

Obama wants to close background check loopholes, to ban military style assault weapons and high capacity magazines and to improve mental health services.

Looking on in the House box of First Lady Michelle Obama were the parents of Hadiya Pendleton, a teenager gunned down in a random shooting not far from the president's Chicago home days after she took part in his inaugural parade.

Republicans, who control the House and can clog up the Democratic-run Senate, were already maneuvering to thwart Obama, after losing a tussle to the president late last year over rising taxes on the rich.

Rising Republican star Marco Rubio noted in excerpts of his response to the president that the US economy shrank 0.1 percent in the last quarter of 2012, and said Obama's spending plans would make it worse.

"I hope the president will abandon his obsession with raising taxes and instead work with us to achieve real growth in our economy," Rubio said.

Hitting full campaign mode, Obama will travel to North Carolina, Georgia and his hometown of Chicago to tout key aspects of the speech this week.