US President Barack Obama has hit the road to push a new $4.35 billion grant programme to encourage American schools to develop internationally competitive standards to let its students take on "folks in Beijing and Bangalore."

The "Race to the Top" fund is one of the largest federal investments in school reform in US history, Obama said on a trip to Wisconsin Wednesday. It is being financed with money made available through the economic stimulus plan enacted in February.

"We're putting over $4 billion on the table ... but we're not just handing it out to states because they want it," Obama told an audience at a Wisconsin public charter school making it clear that the grants will go to only those "committed to real change in the way you educate your kids."

"So, a race to the top has begun in our schools, but the real competition will begin when states apply for the actual Race to the Top grants," he said outlining four key reform measures that will be used to help determine a state's eligibility for grant money.

"The first measure is whether a state is committed to setting higher standards and better assessments that prepare our children to succeed in the 21st century," Obama said noting that 48 US states are now working to develop internationally competitive standards.

"...Internationally competitive standards because these young people are going to be growing up in an international environment where they're competing not just against kids in Chicago or Los Angeles for jobs, but they're competing against folks in Beijing and Bangalore," he said.

Second, the state will need to demonstrate a commitment to policies designed to encourage the recruitment and retention of effective teachers and principals. Conversely, teachers that fail to adequately perform need to be removed, he said.

Third, it will need to design systems to measure student success. Finally, federal officials will examine whether a state is taking steps to overhaul its lowest-performing schools.

"We'll look at whether they're willing to remake a school from top to bottom, with new leaders and a new way of teaching," Obama said. The process of doing so may include replacing a school's staff or even closing a school and sending its students to a better one nearby, he noted.