Obama said the US would seek more opportunities for co-operation, including military ties to promote understanding and avoid "miscalculation".
"We will do this even as we continue to speak candidly to Beijing about the importance of upholding international norms and respecting the universal human rights of the Chinese people."
But Chinese Foreign Ministry spokesman Liu Weimin told ABC radio it might not be appropriate for Australia to strengthen and extend its alliance with the US. "Whether it suits the common interests of countries around the region and the whole international community remains under question," he said.
The Communist Party organ People's Daily said Australia could not play China for a fool in trying to balance its security benefits from the US with economic gains from China. "One thing is certain. If Australia uses its military bases to help the US harm Chinese interests, then Australia itself will be caught in the crossfire."
Indonesian Foreign Minister Marty Natalegawa also warned of potential harm: "What I would hate to see is if such developments were to provoke a reaction and counter-reaction precisely to create that vicious circle of tensions and mistrust or distrust."
Both China and Indonesia, with New Zealand, Japan, South Korea and India, were briefed on the new deployments before the announcement.
Obama said the US would maintain its military strength in the region with a modernised, more flexible defence posture that would include helping allies and friends increase their defence capacity. "With most of the world's nuclear powers and nearly half of humanity, this region will largely define whether the century ahead will be marked by conflict or co-operation, needless suffering or human progress. As President, I've therefore made a deliberate and strategic decision - as a Pacific nation, the US will play a larger and long-term role in shaping this region and its future, by upholding core principles and in close partnership with allies and friends ...
"As we end today's wars, I have directed my national security team to make our presence and missions in the Asia Pacific a top priority. As a result, reductions in US defence spending will not - I repeat, will not - come at the expense of the Asia Pacific."
Beyond security, Obama said the regional focus had two other threads: prosperity and the upholding of fundamental human rights.
"The US remains the world's largest and most dynamic economy. But in an interconnected world, we all rise and fall together."
He said the region also needed to work together to achieve sustainable growth, requiring unprecedented investments in clean energy, increased energy efficiency, and meeting the commitments made at the Copenhagen and Cancun climate change summits.
Obama also visited a high school in Canberra where he was asked of he wanted to use stars such as Justin Bieber to get his message across. "Hopefully, if I'm going to be successful it's going to be because of the ideas I put forward and not because I'm hanging out with Justin Bieber, although he's a very nice young man and I'll tell him you said hi."
Obama flew to Darwin to speak to Australian troops before leaving for the East Asian Summit in Bali.
GIFTS FROM DOWN UNDER
The Australian Government has given US President Barack Obama:
* Sheepskin boots and toy kangaroos and koalas for his daughters.
* A DVD of the Australian smash-hit film Red Dog.
* Two packs of Tim Tam biscuits.
* A fawn-coloured Akubra Cattleman hat.
* A framed photograph of the 1941 signing of the Anzus treaty.
* Books including That Deadman Dance by Kim Scott, Truth by Peter Temple and Breath by Tim Winton.
