Nearly a decade since the attacks of September 11, 2001, Obama portrayed Al-Qaeda as the top security threat facing the country in his State of the Union address, touting progress in efforts to counter the network.

But in a speech devoted mainly to reviving the economy, Obama only briefly touched on terror threats and the wars in Afghanistan and Iraq, where more than 140,000 troops are deployed.

He said Al-Qaeda's leadership was under more pressure in Pakistan now than at any time since the 9/11 attacks and that the US-led war in neighboring Afghanistan would deny the network sanctuary there.

"Their leaders and operatives are being removed from the battlefield. Their safe-havens are shrinking," Obama said of Al-Qaeda in Pakistan.

"And we have sent a message from the Afghan border to the Arabian Peninsula to all parts of the globe: we will not relent, we will not waver and we will defeat you."

Obama's reference to the Arabian Peninsula underscored the rising threat posed by Al-Qaeda's branch in Yemen, which has been blamed for recent plots against US targets.

His vow to pile pressure on Al-Qaeda comes after a dramatic increase in US unmanned drone strikes in northwest Pakistan near the Afghan border, a key battleground in the fight against the Taliban and Al-Qaeda.

Missile attacks doubled in the tribal areas last year as the covert campaign was stepped up, with more than 100 drone strikes killing over 670 people in 2010, compared with 45 strikes that killed 420 in 2009, according to an AFP tally.

The strikes are deeply unpopular among the Pakistani public, which sees foreign military action on Pakistani soil as a violation of national sovereignty.

Pakistan's government tacitly cooperates with the bombing campaign but has yet to launch an offensive against insurgents in North Waziristan, despite repeated appeals from Washington.

Obama credited counter-terrorism operatives for foiling Al-Qaeda plots but also sought to reassure American Muslims that there would be no backlash against them.

On Afghanistan, Obama said US-led forces were rolling back Al-Qaeda's Taliban allies but warned of difficult days ahead in the nine-year-old war.

"Thanks to our heroic troops and civilians, fewer Afghans are under the control of the insurgency. There will be tough fighting ahead, and the Afghan government will need to deliver better governance," he said.

Obama renewed his pledge to start withdrawing some of the nearly 100,000 US troops from Afghanistan in July and that NATO-led forces would begin to hand over security duties to Afghan forces in 2011.

"This year, we will work with nearly 50 countries to begin a transition to an Afghan lead (for security)," he said.

"And this July, we will begin to bring our troops home."

Top officials have suggested the mid-2011 withdrawal date could only involve a small number of troops, with NATO leaders aiming to hand over security for to Afghan forces by the end of 2014.

As a presidential candidate, Obama had backed more troops for Afghanistan and criticized the war in Iraq as a dangerous distraction.

In his speech, Obama said US troops were pulling out of Iraq having fulfilled their mission and could "hold their heads high."

US combat patrols had ended, violence was down and a new government had been formed, he said.

"This year, our civilians will forge a lasting partnership with the Iraqi people, while we finish the job of bringing our troops out of Iraq. America's commitment has been kept; the Iraq War is coming to an end," he said.

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