Obama rejected accusations by conservatives that he is offering a free pass to undocumented immigrants and warned in a prime-time address that he would bolster border security and make it harder for unauthorised outsiders to get into the country.
The executive action, said to be one of the largest measure by a US President on immigration, is expected to help a significant number of Indian techies who currently have to undergo a painful and agonising process of H-1B visas to get legal permanent status (LPR), popularly known as Green Card.
He said a mass deportation of the nation's more than 11 million undocumented immigrants "would be both impossible and contrary to our character".
According to some estimates, there are 4.5 illegal Indian immigrants in the US.
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Obama's plan would let parents of US citizens and legal permanent residents remain in the country temporarily, without the threat of deportation. The measure would apply to those who have been in the US for last five years.
Under the current system, employees with approved LPR applications often wait many years for their visa to become available, a White House fact sheet said.
"We'll build on our progress at the border with additional resources for our law enforcement personnel so that they can stem the flow of illegal crossings, and speed the return of those who do cross over," Obama said.
"I'll make it easier and faster for high-skilled immigrants, graduates, and entrepreneurs to stay and contribute to our economy, as so many business leaders have proposed.