After days of speculation that the trip was in jeopardy following the shutdown crisis, a White House statement late Thursday confirmed Obama would miss the Asia Pacific Economic Cooperation (APEC) summit in Bali and the East Asia summit in Brunei next week.
The president had already cancelled plans to visit Malaysia and the Philippines, but had delayed taking a decision on the summit meetings, both seen as an opportunity to push important foreign policy initiatives in the region.
"Due to the government shutdown, President Obama's travel to Indonesia and Brunei has been canceled," the White House statement said.
"The President made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government."
The White House said Obama had called Indonesia President Susilo Bambang Yudhoyono to inform him of the cancelation.
"He expressed his regret that the ongoing government shutdown in the United States will prevent him from attending the Summit," the statement said.
"President Susilo Bambang Yudhoyono expressed his full understanding of the situation as we have all been following closely the developments in Washington," Indonesian Foreign Minister Marty Natalegawa told AFP from Bali..
Obama also called the Sultan of Brunei, the White House said.
Secretary of State John Kerry would lead the US delegations to both countries in place of Obama, the statement said, before rounding on Republicans for causing a "completely avoidable shutdown."
"The cancelation of this trip is another consequence of the House Republicans forcing a shutdown of the government," the White House statement said.
"This completely avoidable shutdown is setting back our ability to create jobs through promotion of US exports and advance US leadership and interests in the largest emerging region in the world."
The budget impasse which has shuttered swathes of government departments and sent hundreds of thousands of federal workers home had left Obama torn between his political priorities at home and important foreign policy goals.
White House spokesman Jay Carney had already hinted that the trip to Asia was at risk if the government shutdown was not resolved by the time of Obama's scheduled departure on Saturday.
Political analysts had questioned whether Obama would risk traveling abroad and present an opening to domestic foes while on the other side of the globe.
Republicans would almost certainly accuse the president of placing more importance on striding the world stage while neglecting his duties at home.
However analysts had warned a no-show by Obama could hurt US interests in Asia, allowing competitors in the region such as China to make the case that Washington is an unreliable partner.
And early reaction in the region was not great.
Simon Tay, chairman of the Singapore Institute of International Affairs, said Obama's decision "could signal the start of the unravelling of the US pivot to Asia."
"If they can furlough jobs, cease government services and risk a downgrade in the country's credit rating, American politicians may start finding it tough to be consistent in their political reassurances about US commitment toward faraway Asia," Tay wrote in a statement.
"I think there’s a lot at stake here with this trip," said Ernie Bower, a Southeast Asia specialist at the Center for Strategic and International Studies in Washington before the cancelation was made official.
"The geopolitical ramifications of the president not making a trip if he decides indeed that he has to cancel... -- it would leave a big geopolitical mark."
Bower said US allies would also question the extent of Obama's commitment to Asia.
Bower said US allies would also question the extent of Obama's commitment to Asia amid concerns that Washington lacked the political focus and capital to advance its pivot to Asia.
By nixing the Asia visit, Obama will be missing a chance to rub shoulders with leaders like China's Xi Jinping and Russia's Vladimir Putin, key players in ongoing geopolitical crises from Syria to North Korea.
Obama in his first term, sensed an opening with Southeast Asian nations irked by China's increasingly abrasive foreign policy and power plays in simmering maritime territorial disputes in the region.
But the exit of administration heavyweights like former Secretary of State Hillary Clinton and national security advisor Tom Donilon -- both closely identified with the pivot -- have deprived US Asia policy of a figurehead.
Senior administration officials however point to repeated visits to Asia by Defense Secretary Chuck Hagel and noted their commitment to concluding a Trans Pacific Partnership (TPP) region-wide trade deal as proof of US commitment.
They also cite Obama's repeated travel to Asia, most recently in November last year, when he visited Thailand, Cambodia and Myanmar.