The US President signed the order in a White House ceremony, banning discrimination against LGBT people by employers, by amending two existing anti-sexism orders to protect gender identity and sexuality.
The new order only applies to federal contractors, unlike the broader Employment Non-Discrimination Act, which remains stalled in the House of Representatives.
However, it has been praised by some for its lack of a religious freedom exemption, which is present in the current version of ENDA.
Speaking at the signing, Obama said: “Many of you have worked for a long time to see this day coming. Today, our government will become just a little bit fairer.
“It doesn’t make much sense, but today in America, millions of our citizens go to work with the awareness they could lose their job because of who they are – lesbian, gay, bisexual, transgender – and that’s wrong.
“We’re here to do what we can to make it right. To bend the arc of justice, just a little bit, in the right direction.
“Once I sign this order… we’re going to prohibit all companies that receive contracts from the federal government from discriminating against their LGBT employees.
“This is not a matter of political correctness. People lose their jobs.
“Their lives are threatened, their families are threatened. It’s time to address this injustice for every American.
“Congress haven’t gotten it done… but I’m going to do what I can, with the authority that I have.
“We’ve got a long way to go, but I hope [today] you are reminded of the extraordinary progress we have made. We are on the right side of history.”
Attendees at the ceremony included Chad Griffin of the Human Rights Campaign, Rea Carey of the National Gay and Lesbian Task Force, and Tammy Baldwin, the first openly gay member of Congress.
Andre Banks of All Out said: “In a single, bold action, President Obama has thrown open the doors of opportunity for millions of lesbian, gay, bi and trans employees.
“The executive orders set a powerful statement for similar policies at home and abroad.
“Today, the President has stood up for the powerful and proven idea that employment protections are good business and good policy — without loopholes and compromises that create opportunities to discriminate against a person because of who they are or whom they love.”