All times are EST, GMT-5. This live blog has now finished.
22:48
The governor talked about America as a land that blazes a trail of opportunity and where good government gives that opportunity. Again, he stressed low taxation and personal choice over top-down, one-size-fits-all big government. It was a competent speech but it is an odd system that makes for such an unequal contest. The president's real and serious opponents have doubtless been on cable TV while I've been listening to Mr McDonnell.
22:41
He's talked about the Detroit Christmas plot and people's worries that legal rights which are intended for Americans are being given to terrorists. He says taxpayers' dollars should be used to defeat terrorists.
22:34
Last time I saw Bob McDonnell, he was giving a speech in a small airport in Virginia the day before his election victory taking the governor's mansion off the Democrats and winning it for the Republicans. Now he's responding to the president on behalf of his party from Richmond, Virginia. He is responding to the speech that was spun in advance, rather than the one the president actually made. That doesn't mean he is getting it wrong by concentrating on jobs, he's saying that creating new ones is at the top of his agenda as well, but piling on more taxation can only hurt the middle classes.
22:23
It never does any harm to praise the audience you're talking to, esp in the USA. He quotes the woman who says "we're strong, we're resilient, we're American". And tells of the chants of "USA! USA!" when another life was saved in Haiti. He concludes:
"We don't quit, I don't quit, let's seize this moment." It's a strong, well-crafted speech, where he has turned political mistakes to his advantage, suggesting failure to pass healthcare is a badge of courage and that he puts doing the right thing above short-term popularity.
22:18
Back to the bigger theme: he's saying many Americans have lost faith in the big institutions of corporations, media and government. Taking a pop at TV pundits, who reduce serious debates into silly arguments. And another nod towards his own possible shortcomings. He says there are many Americans who aren't sure if there can be change or at least, that he can deliver it. But he's saying he won't play it safe, just to get through the next election. Again, he's portraying himself as the one who's willing to do the right thing, even if it's politically unpopular.
22:13
Finally a little something for the disillusioned liberals of the president's party. "I promise that this year, I'll work to finally repeal the law that denies gay Americans to serve the country they love because of who they are." A big cheer from some. But the men in uniform in the front row aren't getting to their feet, and look rather glum. What do they really think? Don't ask, don't tell.
22:06
After all this, the section on foreign affairs feels squeezed, it took 6 months to decide on policy in Afghanistan, it took just 40 seconds to deliver the message that he's confident that they will succeed.
22:03
The professor of bipartisanship starts to lecture. I'm speaking to both parties now, he says sternly: "What frustrates the American people is a Washington where every day is election day." He acknowledges ruefully: "Campaign fever has come even earlier than usual this year." He tells his party to govern, not to run for the hills. He tells the Republicans that if they continually use the requirement for 60 votes to block any business that this isn't leadership. And he's telling both parties that he wants monthly meetings with both the leaderships, that's the equivalent of "in my study, now!".
21:59
The Republicans have been muttering and sitting without applauding while he suggested their tax cuts were part of the problem, but he's moving on to a wider attack: "We face more than a deficit of dollars right now, we face a deficit of trust, deep and corrosive doubts." He is talking about tougher rules on lobbyists, and reversing the Supreme Court decision to allow corporations to spend without limit on election advertising. Again, only half the chamber get to their feet and applaud. He is boxing the Republicans in, taunting them to vote against a bill that's likely to be popular with the public. About three quarters of the chamber on their feet now.
21:53
He is talking about the deficit. A $3tn hole in the budget: "That was before I walked in the door". Some applause and a couple of whistles, I don't know if of approval or disapproval. He is talking about a three-year freeze that has already been announced, telling his party that even though many are hurting, spending has to be reined in and telling the right that tax cuts for the wealthy won't do the trick either.
21:49
For the first time, there is some acceptance that he got it wrong. He says that the longer healthcare was debated, the more the lobbying and horse trading, the more sceptical people became. He says: "I take my share of the blame." But he is asking Congress "do not walk away from reform, let's finish the job for the American people". No one should be surprised that he doesn't say how. He does ask if anybody has a better idea, to let him know: "let me see it!". Again, they're on their feet, applauding.
21:47
He is praising the first lady for tackling childhood obesity. As she smiles, he says "she gets embarrassed".
21:45
Again, the president is casting himself as the anti-politician, someone who will do the right thing, even if it's foolhardy. He said "I didn't take on healthcare because it was good politics." Scattered laughter. He pauses. He is relaxing into this.
21:38
More difficult stuff: he's talking about clean energy including new nuclear power plants, which got a big cheer, and I suspect not only from his own side. And while he didn't say "drill baby drill" - Sarah Palin's supporters' phrase - he did talk about opening new offshore oil areas. What does he want in return? A bipartisan effort in the Senate for a new energy and climate bill.
21:34
It always helps when politicians have a dragon to slay. The president is talking about financial reform but the passage is important because he is identifying an enemy: the lobbyists who are trying to kill it.
21:31
There is nothing so far even vaguely apologetic about this speech. No sense that he's got anything wrong. He's stressed how the mistakes that have led to this economic crisis have been building up for 10 years. It'll be interesting to see what people make of that tone. He is portraying his critics as people who are telling him he is too ambitious, that America should put its future on hold. He says: "Washington has been telling us to wait for decades." But he does not acccept second place for the USA. That got them to their feet cheering.
21:25
First concrete proposals: $30bn to give small businesses credit. A tax credit for 1m small businesses who hire workers or raise wages, eliminating capital gains tax on small business investment. He needs small businesses on his side and this is directly appealing to them.
21:21
Obama the tax cutter: listing tax cuts he's made and adding after a round of hand clapping: "I thought I'd get some applause for that one!". He is directly speaking to those small business people and blue collar workers who feel let down and telling stories about how the Recovery Act has helped people across America.
21:19
The first laughter of the night, it was on the bank bailout. "I hated it. You hated it. It was about as popular as root canal."
21:17
"I have never been more hopeful about America's future than I have been tonight." It sounded better than it read in cold print, and it got applause. But still, it's audacious and could backfire in the wider audience which doesn't feel as hopeful.
21:16
He says again that America is being tested and he's talking about what I suspect will be the theme of the speech: the frustration and anger of Americans at what seems like bad behaviour on Wall St is being rewarded and why Washington seems to be mired in shoutinesss and pettiness. The president is casting himself as being against the politicians, against politics as normal.
21:12
The president moved into the chamber shaking hands, occasionally kissing and slapping backs. Not surprisingly, he looks rather tense, impatient to get on with it. He's begun by reminding Congress that the State of the Union has taken place in good times and bad. He says you can look bad and assume progress was inevitable but the future was anything but certain.
20:42
The speaker has called the House to order: the Vice-President has been introduced to applause.
Congress is packed and looks somewhat uncomfortable. It may grow less comfortable still: I think they're going to get a bit of a lecture. From the extracts we've seen already, it seems the president is going to be pretty combative: challenging Congress to back him on jobs, banks and tough new rules on lobbyists. Calling on them to overcome "the numbing weight of our politics". Still you never quite get the feel of the whole thing from extracts and the advance spin. The president has left the White House and is on his way to Capitol Hill.