He said Congress had been given ample opportunity to come up with its own plan but had failed to act.
His remarks follow reports in the New York Times
and Fox News that he plans to extend protection from deportation to some parents of legal US residents.
The plan could affect as many as five million undocumented immigrants.
Republicans in Congress say such action would be beyond Mr Obama's authority.
'Tooth and nail'
At a news conference during a visit to Myanmar, Mr Obama said
he had given the House of Representatives more than a year to come up
with an immigration bill but they had failed to do so.
The Senate passed a far-reaching immigration bill in 2013, but the House has not taken up the legislation.
"There has been ample opportunity for Congress to pass a
bipartisan immigration bill that would strengthen our borders, improve
the legal immigration system and lift millions of people out of the
shadows," he said.
"I said that if in fact Congress failed to act I would use
all the lawful authority I possess to try to make the system work
better," he added.
"And that's going to happen before the end of the year."
Mr Obama added that as soon as Congress passed a bill he could sign, "any executive actions will be replaced".
Mr Obama says if Congress can pass a bill which he can sign, he will abandon executive action
Many in the US want prompt action on immigration
But Republicans in Congress said the president should work with them.
"We're going to fight the president tooth and nail if he continues down this path," House Speaker John Boehner told reporters.
Mitch McConnell, the incoming Senate majority leader, urged
the president to "work with us to try to find a way to improve our
immigration system".
The BBC travelled to California and Mexico, to report on US deportees
Some Republicans are pushing for the budget bill to include a
statement prohibiting "the use of appropriated funds for the president's
immigration machinations".
Such a move could provoke a block by the Democrats, or a veto
by the president, which in turn raises the risk of a government
shutdown.
Republicans say they want increased border security alongside immigration reform
Unilateral action has been expected on immigration but details
of what the president was considering were first reported this week.
At the centre of the reports is a plan to extend the
president's "deferred action" plan, which was designed to protect young
adults who were brought to the US illegally as children from being
deported.
The plan is to extend that to the parents of children who are US citizens or legal residents.
The action is designed to prevent the break-up of families
via deportations. The number of those affected by the suggested policy
is based on how long an individual has lived in the US.
If the administration limits the "deferred action" to those
who have lived in the US for more than 10 years, it would affect 2.5
million undocumented immigrants, experts estimate.
Stephanie Ramirez made the agonising decision to leave her family behind
If the time limit is lowered to five years, it would stop deportations for as many as 3.3 million.
Other parts of the executive action reported by the media include:
- Increasing the number of high-tech workers allowed to live and work in the US
- An expansion of the existing deferred action plans that would move the cut-off date for children arriving to 2010
- Shift border security resources to the US southern border, according to reports.