Barack Obama asked Congress for the funds after a week of nationwide protests over perceived policing injustices.
Ferguson in Missouri was rocked by riots after a grand jury decided not to charge a white police officer in the fatal shooting of an unarmed black man.
Protests spread across the US and a mass walkout was held on December 1.
Students and workers held a lunchtime protest in several cities to highlight the issue.
“This is not a problem just of Ferguson, Missouri. This is a national problem, “ Barack Obama said.
The president spoke after a day of meetings with mayors, civil rights leaders and law enforcement officials at the White House.
They discussed a program that currently provides redundant US military tactical gear to local police departments, free of charge.
Barack Obama said he has asked federal agencies for recommendations to ensure the program is not building a “militarized culture” in domestic police forces.
Police in Ferguson, Missouri, were criticized for being heavy-handed in dealing with protests sparked by the shooting of Michael Brown in August.
The funds requested by Barack Obama would be spread over three years and some of the money will go towards purchasing 50,000 body cameras for police officers as well as resources to reform law enforcement departments.
Body cameras can provide evidence of encounters between police and civilians, particularly in disputed cases such as the Ferguson shooting.
The president said the stories of discrimination that young people had told him at the White House on December 1 “violate my belief about what America can do”.
Barack Obama also unveiled a taskforce on modern policing, to be chaired by Philadelphia police commissioner Charles Ramsey.
Also on Monday, a commission tasked with making recommendations on issues stemming from the fatal shooting has convened in Ferguson.
The 16-member panel, stood up by Missouri Governor Jay Nixon, will consider changes in areas including public interaction with law enforcement and community stability.
The officer who shot Michael Brown in Ferguson, Darren Wilson, resigned from the force over the weekend.
The decision not to charge Darren Wilson days earlier triggered a nationwide debate over relations between black communities and law enforcement.
The policeman said he had feared for his life.
Michael Brown’s supporters said the teenager was attempting to surrender when he was shot. Some witnesses said the 18-year-old, who was unarmed, had his hands up.
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