Seeking to regain the initiative amid a series of controversies that have threatened his second-term agenda, Obama said new leadership was needed to restore public confidence in the IRS, whose reputation for political independence has suffered a major blow.
With congressional investigations looming, Obama said he had told Treasury Secretary Jack Lew to seek the resignation of Steven Miller, the acting IRS commissioner, and Lew had done so.
"I'll do everything in my power to make sure nothing like this happens again by holding the responsible parties accountable, by putting in place new checks and new safeguards," Obama told reporters in the White House's ornate East Room.
The IRS revelations have added to a sense of a White House under siege and a president struggling to gain control of fast-moving events.
Republicans continue to bash the administration's handling of the attack last year on the U.S. mission in Benghazi, Libya. And on Monday, the Justice Department came under fire for seizing phone records of journalists from the Associated Press as part of a criminal probe into intelligence leaks.
Obama spoke after meeting with senior Treasury officials on ways to quell the growing uproar after a government watchdog described how poor management led to an "inappropriate" focus on claims by conservative groups for tax-exempt status.
The Democratic president, who had been accused by Republican critics of reacting too passively to the scandal, called the misconduct "inexcusable."
"Americans are right to be angry about it, and I am angry about it," he said. "I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has into all of our lives."
He promised to work "hand in hand" with Congress to fix the problem but, acknowledging the realities of a divided Washington, urged lawmakers to deal with the delicate issue in a way that does not "smack of politics or partisan agendas."
Obama's announcement followed stepped-up calls from Republican lawmakers for Miller, who was aware in 2012 of the agency's efforts to single out conservative groups as a deputy IRS commissioner, and other top IRS officials to step down.
Republicans made clear they intended to keep up the pressure on the Obama administration.
"More than two years after the problem began, and a year after the IRS told us there was no problem, the president is beginning to take action," Senate Republican Minority leader Mitch McConnell said.
"If the president is as concerned about this issue as he claims, he'll work openly and transparently with Congress to get to the bottom of the scandal - no stonewalling, no half-answers, no withholding of witnesses," he said.
Miller voices 'regret' for departure
Miller said in a message to colleagues that there was a "strong and immediate need" to restore public trust in the nation's tax agency.
"It is with regret that I will be departing from the IRS as my acting assignment ends in early June," Miller wrote. "This has been an incredibly difficult time for the IRS given the events of the past few days."
Earlier on Wednesday, CNN quoted a congressional source as saying Miller had said the IRS had pinpointed two "rogue" employees in the agency's Cincinnati, Ohio, office as being principally responsible for "overly aggressive" reviews of requests for tax-exempt status by groups associated with the conservative Tea Party movement.
The Justice Department has launched a criminal probe of the IRS, and on Wednesday a third congressional committee announced that it would begin its own investigation.
Democrats have also voiced outrage over the IRS's actions but have mostly avoided chastising the administration.
Earlier, on Capitol Hill, House of Representatives Speaker John Boehner offered harsh criticism of the IRS. "My question isn't about who is going to have to resign. My question is who is going to jail over this scandal," he said.
All 45 Republican members of the US Senate sent Obama a letter demanding that his Democratic administration fully comply with congressional requests for information in the scandal.
"The American people deserve to know what actions will be taken to ensure those who made these policy decisions at the IRS are being held fully accountable and more importantly what is being done to ensure that this kind of raw partisanship is fully eliminated from these critically important non-partisan government functions," the senators wrote.
The audit issued on Tuesday by the Treasury Inspector General for Tax Administration (TIGTA) described a series of problems within the IRS that led the agency to use "inappropriate criteria" for evaluating tax-exempt groups, in part by singling out scores of conservative Tea Party and "Patriot" organizations for increased scrutiny.
But the audit did not find evidence the IRS actions were motivated by partisan interests - a conclusion some Republicans do not accept. The notion of a federal agency targeting conservatives based on ideology feeds into a Republican narrative of growing government intrusion under Obama.
Despite efforts by some conservative commentators to cast the IRS troubles as something akin to the Watergate scandal of the 1970s, or to former President Richard Nixon's use of the IRS to target his political enemies, there has been no sign of White House involvement.
For the IRS and the administration, however, the stakes are particularly high because the agency is playing an increasingly significant role not only in vetting the tax status of non-profit groups that dabble in politics but also in enforcing parts of Obama's ongoing overhaul of the healthcare system.