Krueger, if confirmed by the Senate, would succeed Austan Goolsbee who left the administration to return to academia in Chicago, the White House official said, on condition of anonymity.
The Wall Street Journal, which first reported the appointment, said Krueger would likely prove to be an advocate for more concerted action by the government to tackle 9.1 percent unemployment.
He served as assistant Treasury secretary for economic policy, during Obama's first two years in the White House.
Obama is readying a new economic package designed to create jobs and cut the deficit which will unveiled in a major speech next month.
But Republicans in the House of Representatives have already signaled that they oppose some of Obama's likely policy prescriptions and say the best way to stimulate growth would be to loosen government control over the economy.
The CEA is a three-member body that interprets prevailing economic conditions and provides policy recommendations to the president.
Its most high profile role in recent months has been to comment on monthly jobless figures which have shown that new positions are not being created quickly enough in a slowing recovery to bring down unemployment significantly.
Copyright AFP (Agence France-Presse), 2011