The top names under consideration for defense secretary are former Republican Sen. Chuck Hagel of Nebraska, former top Pentagon official Michele Flournoy, Deputy Defense Secretary Ashton Carter, and Democratic Sen. John Kerry of Massachusetts. Among those, Kerry is seen as desiring the secretary of state's job more.
While Obama has made no final decisions on cabinet vacancies, announcements could come as soon as this week.
Defense Secretary Leon E. Panetta has made clear he did not intend to stay for a second term but he has never publicly discussed the timing of his departure, widely thought to be down the road in 2013. Yet Obama's thinking on Panetta's replacement has quietly advanced, aided by a strong list of candidates, officials said.
One senior U.S. official said Panetta is expected to stay on the job at least through the Jan 21 inauguration ceremony for Obama, another sign that the president is close to naming a new defense chief. The officials spoke on condition of anonymity because they were not authorized to publicly discuss internal White House thinking.
Far more political attention has centered on the chief diplomatic job of secretary of state.
Obama is believed almost certain to pick Kerry or U.N. Ambassador Susan Rice, with Obama's considerations of his choice so closely held that even members of his innermost circle are asking each other which way he may go. Secretary of State Hillary Rodham Clinton has long announced her plans to leave and hopes to do so soon.
The White House is considering packaging the state and defense choices with the flourish of a unified announcement, if the pieces come together. Obama wants to choose nominees not just on their merits, the officials said, but on how well their styles and philosophy mesh with other members of the cabinet who will hold overlapping portfolios.
That is particularly true for the leaders of state and defense. They are the top faces of his security apparatus, the leaders who bracket Obama at cabinet meetings, the ones central to an integrated approach toward coping with international crises. Officials close to Obama said a joint announcement could present a stronger message.
For the State job, Obama has strong ties to both candidates. Rice is a close friend, and aides say the two are in lockstep on foreign policy. Kerry was an early backer of Obama during his 2008 presidential bid, a valuable envoy abroad, a help in his reelection bid, and a contender to be his first secretary of state.
A big factor in Obama's decision is how much early capital he would have to spend on a confirmation fight. While Kerry has the backing of his longtime Senate colleagues, Rice is facing withering criticism from some Republicans for her initial account of the deadly attack on Americans in Benghazi, Libya, in September.
A contentious confirmation fight could send Rice into the job with weakened support and use up some of the tough votes he may need from allies in the Senate later. Still, Obama has already set a tone that he may choose Rice regardless.