However, he proposed new rules on evidence and detainee rights.
Rights campaigners reacted angrily, warning the move would prolong the 'injustice' of the camp.
It comes days after President Obama dismayed some backers by deciding to oppose the release of photos of Iraq and Afghan prison abuses.
'This is the best way to protect our country, while upholding our deeply-held values,' Mr Obama said in a written statement outlining his reasoning and a set of reforms to the military commissions.
'These reforms will begin to restore the commissions as a legitimate forum for prosecution, while bringing them in line with the rule of law', he said.
President Obama halted the Guantanamo tribunals pending a review after taking office in January, saying the system did not work, but did not rule out the use of a modified system in future.
Last year however, then-candidate Obama had called the military commissions 'an enormous failure'.
The president said the US Department of Defense would ask for extension of the suspension of military commissions to permit time for reforms.
Commissions were 'appropriate for trying enemies who violate the laws of war, provided that they are properly structured and administered', Mr Obama said.
He said he objected to Bush administration commissions because they 'failed to establish a legitimate legal framework and undermined our capability to ensure swift and certain justice' against detainees.
