Attorney General Alberto Gonzales said that the programme, which is operated by the National Security Agency, would now be overseen by a court.
Judicial oversight is one of the concessions demanded by critics of the programme, but Gonzales has proposed making the programme accountable to a secret court, the Foreign Intelligence Surveillance Court (FISC), which sits in Washington behind closed doors.
The Foreign Intelligence Surveillance Act allows the FISC to authorise surveillance of phone and net traffic as well as physical surveillance.
The NSA is accused in a suit filed by the Electronic Frontier Foundation (EFF) of operating an unconstitutional surveillance programme which monitors the telephone traffic of US citizens. It accuses telco AT&T of allowing the NSA access to its networks, an accusation to which the company has not directly responded.
The EFF said that it was not yet clear whether or not Gonzales's move affects its lawsuit or whether that suit would continue.
The Democrat senator at the head of the Senate's Judiciary Committee welcomed the move. "I welcome the President’s decision not to reauthorize the NSA’s warrantless spying program and instead to seek approval for all wiretaps from the Foreign Intelligence Surveillance Court, as the law has required for years," he said.
"We must engage in all surveillance necessary to prevent acts of terrorism, but we can and should do so in ways that protect the basic rights of all Americans including the right to privacy," said Leahy. "The issue has never been whether to monitor suspected terrorists but doing it legally and with proper checks and balances to prevent abuses."
The EFF suit is based on the rights of US citizens to have private communications. "The lawsuit alleges that AT&T continues to assist the government in its secret surveillance of millions of Americans," said an EFF statement. "EFF, on behalf of a nationwide class of AT&T customers, is suing to stop this illegal conduct and hold AT&T responsible for its illegal collaboration in the government's domestic spying program, which has violated the law and damaged the fundamental freedoms of the American public."
