The U.S. no longer will threaten to prosecute hostages' relatives who discuss or pay ransoms, a change in policy that follows complaints from the relatives of kidnapped Americans.
"We're not going to abandon you. We will stand by you," Obama said, recounting his message to the families of current and former hostages he met with prior to his announcement.
"I acknowledged to them in private what I want to say publicly, that it is true that there have been times where our government, regardless of good intentions, has let them down," Obama said. "I promised them that we can do better."
The U.S. will not bend on its refusal to make concessions to terrorists, the president said, but the new policy clarifies for the first time that "no concessions" does not mean "no communication," according to a new executive order.
The U.S. may communicate with hostage takers or their intermediaries, the order and a policy directive say, and may also "assist private efforts to communicate with hostage-takers" in the recovery efforts.
The changes are the result of an extensive review of hostage practices Obama ordered last fall after a series of kidnappings and the high-profile killings of American journalists James Foley and Steven Sotloff by Islamic State extremists.
The review included interviews with several former hostages and their families and examined their concerns about how they were treated by the government. Obama said family members told him of their frequent frustrations of dealing with the government and about how different departments and agencies gave confusing and conflicting information.
They've felt "lost in the bureaucracy," he said, and as if "they've been threatened for exploring certain options to bring their loved ones home."
"That's totally unacceptable," Obama said. "As I've gotten to know some of these families and heard some of these stories, it has been my solemn commitment to make sure that they feel fully supported in their efforts to get their families home."
Some family members are concerned about other components of the new policy. In particular, some are skeptical of the idea of keeping the FBI in charge of a process that they feel has let them down.
The wife of Warren Weinstein, a government contractor killed in a U.S. drone strike against his Al Qaeda captors this year, said in a statement that she thinks the setup won't allow for enough interagency coordination.
One senior administration official said the FBI was chosen to lead the operation because of its experience in conducting investigations, gathering intelligence and supporting crime victims. The attorney general will establish within the FBI an interagency hostage recovery operation that fuses together representatives from the departments of Justice, State, Treasury and Defense as well as intelligence officials.
The hostage rescue system that Obama set up is not an FBI organization, the official said, but rather "will bring the requisite expertise from all departments and agencies to bear" on the recovery of Americans taken hostage overseas. The official requested anonymity to discuss the new policy in advance of the president's announcement.
The new plans were crafted as part of a sweeping policy review over several months, a process that also included interviews with families.
In addition to the FBI-led group, the president's National Security Council will have a hostage response group that meets every week to keep an eye on hostage recovery strategies and lend help. A special presidential envoy for hostage affairs will be charged with coordinating U.S. diplomacy on hostage matters.
He quoted Diane Foley, the mother of James Foley, as saying, "As Americans, we can do better."
"I totally agree," Obama said. "We must do better."