US President Barack Obama has declared that America should be the country that “cures cancer once and for all”, in a final State of the Union speech in which he also chided Congressional leaders for their political divisions.

Delivering his last annual speech to Congress before leaving office next January, Mr Obama said he wanted to focus on the future, asking the audience to consider how to improve fairness in the economy, use technology to combat climate change and keep America safe and lead the world “without becoming its policeman”.

He announced a national initiative to cure cancer, on the back of the National Institutes of Health receiving a funding boost over the last decade. However details of the new initiative were not outlined in the speech.

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“Last year, vice-president [Joe] Biden said that with a new moonshot, America can cure cancer. Last month, he worked with this Congress to give scientists at the National Institutes of Health the strongest resources they’ve had in over a decade.

“Tonight, I’m announcing a new national effort to get it done.

“And because he’s gone to the mat for all of us, on so many issues over the past 40 years, I’m putting Joe in charge of Mission Control. For the loved ones we’ve all lost, for the family we can still save, let’s make America the country that cures cancer once and for all.”

Mr Obama also asked Americans to consider how to make politics reflect “what’s best in us, and not what’s worst”.

Economy not in decline, but more progress needed: Obama

Mr Obama stressed a strong private sector was key to the economy. Photo: Getty

Mr Obama said the nation’s economy was not in decline, and anyone who suggested so was “peddling fiction”.

“For the past seven years, our goal has been a growing economy that works better for everybody. We’ve made progress. But we need to make more,” he said.

He said it was critical to lift education standards and make college affordable for “every American”.

Improving social security and Medicare needed to be strengthened.

Mr Obama said a thriving private sector was “the lifeblood of our economy” but outdated regulations and red tape needed to be cut.

“But after years of record corporate profits, working families won’t get more opportunity or bigger paycheques by letting big banks or big oil or hedge funds make their own rules at the expense of everyone else; or by allowing attacks on collective bargaining to go unanswered,” he said.

“In this new economy, workers and start-ups and small businesses need more of a voice, not less. The rules should work for them.”

‘When you come after Americans, we go after you’

Mr Obama also sounded a warning to Islamic State (IS) militants, while calling on Americans to show respect towards Muslims.

“The American people should know that with or without Congressional action, IS will learn the same lessons as terrorists before them,” he said.

“If you doubt America’s commitment or mine to see that justice is done, ask Osama bin Laden. Ask the leader of Al Qaeda in Yemen, who was taken out last year, or the perpetrator of the Benghazi attacks, who sits in a prison cell.

“When you come after Americans, we go after you. It may take time, but we have long memories, and our reach has no limit.”

He said America needed to reject politics that targeted people based on race or religion.

“When politicians insult Muslims, when a mosque is vandalised, or a kid bullied, that doesn’t make us safer,” he said.

“That’s not telling it like it is. It’s just wrong.

“It diminishes us in the eyes of the world. It makes it harder to achieve our goals and it betrays who we are as a country.”

‘We need to fix our politics’

Mr Obama said political discourse was meant to be messy, but – in an apparent nod to proposals by Republican candidates such as Donald Trump – required “bonds of trust” between citizens.

He said one of the few regrets of his presidency was that the relationship between the Democrats and Republicans had worsened.

Too many Americans felt the democratic system was “rigged” in favour of the powerful, he said.

“The future we want … opportunity and security for our families; a rising standard of living, a sustainable, peaceful planet for our kids; all that is within our reach,” Mr Obama said.

“But it will only happen if we work together. It will only happen if we can have rational, constructive debates.

“It will only happen if we fix our politics.

“It won’t be easy. Our brand of democracy is hard. But I can promise that a year from now, when I no longer hold this office, I’ll be right there with you as a citizen – inspired by those voices of fairness and vision, of grit and good humour and kindness that have helped America travel so far.”

Republicans respond to Obama’s message to respect Muslims

Unsurprisingly, Mr Obama was lauded by his Democrat party faithful, while Republicans were less enthusiastic.

He was given a rousing reception when he entered the chamber and as he departed from the lectern.

On Twitter, Secretary of State and Democrat presidential candidate Hillary Clinton said the country needed to “not go backwards” from Mr Obama’s seven-year term.

Seven years of progress. We need to build on it—not go backwards. #SOTU pic.twitter.com/LlLjQi2AS4

— Hillary Clinton (@HillaryClinton) January 13, 2016

It appears Obama is still under the impression ISIS is the JV team. Next President must understand the enemy and the threat. #SOTU — Jeb Bush (@JebBush) January 13, 2016

Meanwhile, front-running Republican candidate Donald Trump labelled the president’s speech as “boring”. Fellow Republican candidate Jeb Bush also lashed out Mr Obama, saying he was “living in a different world” with IS on the rise and North Korea testing nuclear weapons.

In the official Republican response to Mr Obama’s speech, South Carolina governor Nikki Haley took a softer tone on immigration and appeared to respond to Mr Trump’s calls for a ban on allowing Muslims to enter the United States.

“Some people think that you have to be the loudest voice in the room to make a difference,” she said.

“That is just not true. Often, the best thing we can do is turn down the volume. When the sound is quieter, you can actually hear what someone else is saying. And that can make a world of difference.”

-with agencies