"He brings the respect that he earned during his years of leadership in Congress," Obama said of the former Senate Democratic leader. "He knows how to reach across the aisle and bridge bipartisan divides. And he has the trust of folks from every angle of this issue."

INDUSTRY WELCOMES NOMINATION

Daschle's nomination was widely welcomed by the industry and lawmakers who noted that he was well respected on Capitol Hill.

The American Medical Association praised Daschle as a leader who "has demonstrated a commitment to working with physicians" and said the creation of a White House office on health reform "highlights the importance and priority" that Obama places on the issue.

Obama, who beat Republican John McCain in the November 4 election in part because of his promises to provide affordable healthcare to all Americans, said the country had to move ahead with the plan despite the current financial crisis.

"Some may ask how at this moment of economic challenge we can afford to invest in reforming our healthcare system. I ask a different question. I ask, 'How can we afford not to?'"

"Instead of expanding and creating new jobs, our companies are pouring more and more money into a health care system that is failing too many families," Obama said. "If we want to overcome our economic challenges, we must also finally address your healthcare challenge."

Reforming the system could cost up to $75 billion (50 billion pounds), according to consulting firm PricewaterhouseCoopers.

Obama originally planned to pay for it by rolling back Bush administration tax cuts for Americans earning more than $250,000 a year and keeping the estate tax at its 2009 level.