Khalid Sheikh Mohammed (centre) had a pre-trial hearing at Guantanamo in December 2008 Khalid Sheikh Mohammed, the alleged mastermind of the 9/11 attacks, and four alleged co-conspirators will be tried in a military commission at Guantanamo Bay, not a civilian court.
"We simply cannot allow a trial to be delayed any longer," Attorney General Eric Holder said, in a sharp U-turn.
The Obama administration abandoned plans to try Khalid Sheikh Mohammed in a US court, amid fierce opposition.
President Obama recently lifted a freeze on new military terror trials.
He accused the US Congress of harming national security by opposing his plan to close the controversial Cuban prison and try some terror suspects in US civilian courts.
Death penaltyMr Holder vigorously defended his earlier decision to use US federal courts to try the accused men during a news conference announcing the reversal on Monday.
He said that the US prison system had successfully held hundreds of convicted terrorists, and that the Obama administration would continue to prosecute terror cases in US courts.
Mr Holder blamed Congress for the high profile policy reversal, saying his hands "were tied" by "unwise and narrow" restrictions they had placed on the administration.
But, he said, the Justice Department had been prepared to "bring a powerful case" against Mohammed and his four co-conspirators.
Mr Holder noted though that the death penalty could be still sought in the case.
'Waterboarding'Khalid Sheikh Mohammed has been held by the US since being captured in Pakistan in 2003.
In a 2007 hearing, he alleged that he had been tortured at Guantanamo Bay. CIA documents confirmed that he had been subjected to the waterboard technique 183 times.
US prosecutors say that Mohammed has confessed to a host of terrorist activities in addition to 9/11.
These include the 2002 nightclub bombing in Bali, Indonesia, the 1993 World Trade Center bombing, the murder of American journalist Daniel Pearl and a failed 2001 attempt to blow up an airliner using a shoe bomb.
The four other suspected terrorists to face military trials at Guantanamo Bay are Walid bin Attash, Ramzi Binalshibh, Ali Abdul Aziz Ali and Mustafa Ahmed al Hawsawi.
'War criminal'When he came into office in 2009, President Obama promised to close Guantanamo Bay within a year. Several months later, his attorney general, Eric Holder, announced that Khalid Sheikh Mohammed would be tried in a civilian court in New York.
But, says the BBC's Paul Adams, in Washington, in the teeth of widespread opposition, the administration's plans have gradually been shelved.
Guantanamo is still open and military trials are set to resume there.
Asked about the change of strategy on Monday, the White House spokesman Jay Carney said only that the president's primary concern was that the alleged 9/11 perpetrators be brought to justice as swiftly and fairly as possible.
Congressional opposition to the president's plans, he said, had proved very difficult to overcome.
Following news of the announcement, House Judiciary Committee Chairman Lamar Smith, of Texas, was quoted by AFP as saying: "It's unfortunate that it took the Obama administration more than two years to figure out what the majority of Americans already know: that 9/11 conspirator Khalid Sheikh Mohammed is not a common criminal, he's a war criminal."
Senators John McCain and Joe Lieberman released a joint statement acknowledging that the reversal had been difficult for the Obama administration but "it is the right decision and we strongly commend the President and the attorney general for reaching this decision".