(Updates with Obama announcement, quotes)

By Jeff Mason

WASHINGTON, Jan 26 (Reuters) - U.S. President Barack Obama began reversing the climate policies of the Bush administration on Monday, clearing the way for the government to allow states to set stricter limits on greenhouse gas emissions from cars.

The president told the U.S. Environmental Protection Agency to reconsider California's request, denied under President George W. Bush, that would allow it to impose stricter limits on vehicle carbon dioxide emissions, blamed for contributing to global warming.

As many as 18 other states have indicated they may follow California's lead, putting tailpipe emissions standards that are tougher than federal requirements into effect.

"The federal government must work with, not against, states to reduce greenhouse gas emissions," Obama said at the White House, taking a stab at his predecessor's policies.

"California has shown bold and bipartisan leadership through its effort to 21st century standards. And over a dozen states have followed its lead."

The president also directed the Department of Transportation to move forward with setting vehicle fuel efficiency standards for 2011 by March, giving automakers an 18 month period to impose them.

He also instructed the U.S. government in general to become more energy efficient.