Mr Obama asked Congress for the funds as part of a day of White House meetings following a week of unrest.
Ferguson in Missouri was rocked by riots after a grand jury failed to charge a white police officer in the fatal shooting of an unarmed black man.
Protests spread across the US over perceived policing injustices, informs Report citing BBC.
The funds requested by Mr Obama would be spread over three years and go toward purchasing 50,000 body cameras for police officers as well as resources to reform law enforcement departments.
"The initiative as a whole will help the federal government efforts to be a full partner with state and local [law enforcement agencies] in order to build and sustain trust between communities and those who serve and protect these communities," the White House wrote in a statement.
The US leader will also create a taskforce on modern policing, to be chaired by Philadelphia police commissioner Charles Ramsey.
The announcements follow a series of meetings at the White House with civil rights leaders to discuss mistrust between law enforcement and communities of colour.