Mr Obama's most direct demand yet that Mr Gaddafi step down was made in a telephone call with German chancellor Angela Merkel to coordinate their response to the crisis, the White House said.
"The president stated that when a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now," it said.
Hours later, the UN Security Council voted unanimously to order an investigation into crimes against humanity, an arms embargo and travel bans and asset freezes targeting Mr Gaddafi, his family and inner circle.
The resolution cited "gross and systematic violation of human rights, including the repression of peaceful demonstrators" and incitement to hostility and violence "from the highest levels of the Libyan government."
Australia has welcomed the decision, with Foreign Affairs Minister Kevin Rudd saying it sends a clear and unambiguous message to the Libyan regime that it must meet its responsibility to protect the Libyan people.
The UN resolution stopped short of demanding Mr Gaddafi be removed from power, something that Mr Obama had also refrained from doing while US citizens were being evacuated from Libya.
But the president and secretary of state Hillary Clinton sharply changed tack Saturday in back-to-back statements.
"Moamar Gaddafi has lost the confidence of his people and he should go without further bloodshed and violence," Ms Clinton said.
"The Libyan people deserve a government that is responsive to their aspirations and that protects their universally recognized human rights."
The diplomatic moves came as Mr Gaddafi hunkered down in Tripoli for what many feared would be a bloody showdown with rebels that have taken control of large areas of the oil-rich North African country.
The Libyan leader's son, Seif al-Islam Kadhafi, earlier told Al-Arabiya television that the crisis had "opened the doors to a civil war."
Foreigners flee
As the impasse deepened, thousands of foreign workers were trying to flee the country and embassies closed their doors. The United Nations estimates that more than 1,000 civilians have been killed so far.
The UN refugee agency said Sunday that "close to 100,000 people", mainly foreign migrants, have fled Libya to neighbouring countries during the past week of turmoil.
A UNHCR count showed that they were overwhelmingly foreign migrants, mainly Egyptians and Tunisians.
The Red Crescent said earlier that more than 10,000 people fled Libya into Tunisia at the Ras Jedir post on Saturday alone, most of them Egyptians, calling the situation a "humanitarian crisis" as the flow grew.
Before those arrivals, the Tunisian government said Saturday that 40,000 people had crossed from Libya since February 20, while Egyptian authorities accounted for 55,000 people fleeing since February 19, according to the UNHCR.
The refugee agency urged foreign help for Egypt and Tunisia to cope with the exodus.
The UNHCR revealed that its staff had crossed the border from Egypt, and met Libyan police and military nearby who said that they had defected from government forces and were working with local committees of tribal leaders.
Those tribal leaders told the agency there was a need for humanitarian assistance in Libya, "with a critical shortage of food throughout the eastern region, as well as shortages of some medical supplies," it added.
The reports of food shortages echo unconfirmed claims by some Libyan opposition members.
