The announcement comes after the White House suggested last year that Obama would maintain programs that provide the type of military-style equipment used to respond to demonstrators last summer in Ferguson, Missouri, because of their broader contribution to public safety.
But an interagency group found "substantial risk of misusing or overusing" items like tracked armored vehicles, high-powered firearms and camouflage, which could undermine trust in police.
The announcements come as Obama is visiting Camden, New Jersey, one of the country's most violent and poorest cities.
In previewing the president's trip, the White House said that effective immediately, the federal government will no longer fund or provide armored vehicles that run on a tracked system instead of wheels, weaponized aircraft or vehicles, firearms or ammunition of .50-caliber or higher, grenade launchers, bayonets or camouflage uniforms.
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In addition, a longer list of equipment the federal government provides will come under tighter control. Starting in October, police will have to get approval from their city council, mayor or some other local governing body to obtain it, provide a persuasive explanation of why it is needed and have more training and data collection on the use of the equipment.
The issue of police militarization rose to prominence last year after a white police officer in Ferguson fatally shot unarmed black 18-year-old Michael Brown, sparking protests.
"There is a big difference between our military and our local law enforcement and we don't want those lines blurred," Obama last in August.