In a televised address, Mr Widodo was joined by key policymakers to announce a broad range of measures including the slashing of red tape to woo investors, moves to bolster the rupiah and programs to help the poor.
The president said the stimulus was aimed at providing an "economic jump forward", and that two other parts of the package would be unveiled in the coming weeks.
Mr Widodo came to power last year pledging to boost the G20 economy but his government has faced criticism for a series of policy backflips, sending mixed messages to investors and a failure to get key initiatives off the ground.
In a bid to cut through red tape, the president said Wednesday that adjustments were being made to 89 regulations to simplify doing business and cut "irrelevant regulations which have hampered the competitiveness of national industry".
Policies announced to help the poor included the provision of cheaper fuel to fishermen, more funding to villages and the strengthening of a program to provide cheap rice.
Agus Martowardojo, governor of the central bank, Bank Indonesia, announced measures to help the rupiah, including improving the management of foreign exchange flows.
Other steps unveiled in the package included helping exporters with financing and making it easier for frequent foreign visitors to Indonesia to open bank accounts.
Mr Widodo had pledged to kickstart growth by creating new jobs for the young, starting a flurry of infrastructure projects and boosting the manufacturing sector.
But growth has continued to slide, hitting a six-year low of 4.7 per cent in the second quarter, while the rupiah has fallen to a 17-year low in recent months.
On Wednesday, the rupiah was changing hands at 14,250 to the US dollar.
Like other emerging markets, Indonesia has also been hit by external factors, such as expectations that the US will soon raise interest rates and China's devaluation of its currency.
Mr Widodo had already taken some steps to boost confidence in his economic management.
Earlier this month, he announced tax breaks for some industries and in August he replaced key economic ministers in a cabinet reshuffle.
Vice president a notable absentee from announcements
Due to illness, Indonesian vice president Jusuf Kalla was a notable absentee from Mr Widodo's economic announcement at the presidential palace.
Mr Kalla was hospitalised, reportedly with a heart condition, in what could be seen as a political blow for the country's new president.
The 73-year-old served as vice president for a term under the previous president Susilo Bambang Yudhoyono and returned as running mate for the current president.
Mr Kalla is seen as a key political ally for Mr Widodo because he was affiliated with a powerful opposition party, Golkar, which was officially backing Mr Widodo's opponent, Prabowo Subianto.
The vice president also reportedly missed a number of other key appointments.