For now, the phone records will continue to reside with the government. But the NSA will need to get approval from the secretive Foreign Surveillance Intelligence Court each time it wants to access the data, a more cumbersome process than currently required. Exceptions will be made in the event of a national security emergency, officials said.
Responding to outrage overseas, Obama pledged on Friday to curb spying on friendly allied leaders and to extend some privacy protections to foreign citizens. The proposals appeared to ease some anger in Germany, which had been particularly incensed by revelations that the NSA had monitored the communications of Chancellor Angela Merkel.
Despite the firestorm at home and abroad, Obama robustly defended the intelligence community's role in keeping the nation safe. But he said the U.S. had a "special obligation" to ensure that its muscular spying apparatus was not trampling on civil liberties.
"The reforms I'm proposing today should give the American people greater confidence that their rights are being protected, even as our intelligence and law enforcement agencies maintain the tools they need to keep us safe," he said during a speech at the Justice Department.
Privacy advocates, who have pushed for ending the phone record collections altogether, criticized the president's restrictions as insufficient. The intelligence community appeared publicly content with his plans.
On Capitol Hill, the response was decidedly mixed. A rare cross-section of lawmakers from both parties, including House Minority Leader Nancy Pelosi, D-Calif., and Sen. Rand Paul, R-Ky., called for greater reforms. House Speaker John Boehner, R-Ohio, blamed the president for failing in the past to properly explain the importance of certain intelligence gathering practices.
Sen. Dianne Feinstein, D-Calif., and Rep. Mike Rogers, R-Mich., who head their chambers' intelligence committees, called on the president to send them specific legislation with his proposed changes.
Obama's announcement capped a six-month White House review triggered by Snowden's flood of disclosures about the scope of U.S. spying. But by ordering further review of key issues, Obama ensured that his speech would hardly be the final word in the resurgent debate over balancing privacy and security.
The most glaring omission in Obama's announcement was any recommendation on where Americans' phone records should be kept if they are no longer housed by the government. A presidential review board recommended moving the data to the phone providers or a third party, but both options present obstacles. The phone companies strongly oppose the expense and potential liability of holding the data, and no credible third party option has emerged. Administration officials also raised the possibility of replacing the bulk phone collection program with new surveillance methods that would negate the need to store the data long-term.
Obama ordered the Justice Department and intelligence community to report back to him with options within 60 days. If they propose housing the data with the phone companies or a third party, congressional legislation would almost certainly be needed, raising questions about how quickly lawmakers could reach an agreement, if at all.
"I think the odds are long that we can get it done in a timely way," said Rep. Adam Schiff, D-Calif., though he was largely supportive of the president's proposals.
Under Obama's plan, the government will no longer be able to gain access to phone records beyond two "hops" from the person they are targeting. That means the government can't examine records for someone who called someone who called someone who called the suspect.
Privacy advocates said they were troubled that Obama's proposals did not go further.
"He seems to endorse amending bulk data collection but not ending it," said Anthony Romero, the executive director of the American Civil Liberties Union.
The president cast the changes as a pre-emptive attempt to curb possible government abuse as new technologies give intelligence agencies the ability to round up more information more quickly. But he said there was nothing in the White House review that "indicated that our intelligence community has sought to violate the law or is cavalier about the civil liberties of their fellow citizens."
Obama mentioned Snowden and his disclosures in negative but measured language.
"The sensational way in which these disclosures have come out has often shed more heat than light, while revealing methods to our adversaries that could impact our operations in ways that we may not fully understand for years to come," he said.
Anger with the U.S. after Snowden's revelations has been particularly strong abroad, especially when it was revealed that the Americans were monitoring the communications of friendly foreign leaders such as Merkel and Brazil's President Dilma Rousseff. Obama said new guidelines will cut back on such monitoring, except when there is a compelling national security interest.
"The leaders of our close friends and allies deserve to know that if I want to learn what they think about an issue, I will pick up the phone and call them rather than turning to surveillance," said Obama, who also called on the Justice Department to look for ways to extend privacy protections to foreign citizens.
The president's assurances were welcomed by officials in Europe, though they cautioned that details of the plans still needed to be analyzed.
"The government continues to expect that German law be respected on German territory, including and particularly by our close partner," said Steffan Seibert, a spokesman for Germany's government.
The reaction was not as warm in Brazil. Vanessa Grazziotin, a Brazilian politician investigating U.S. spying there, said, "The spying on friends and allies should have never happened."
Many of the president's recommendations were aimed at increasing the American public's trust in the spying operations. He called on Congress to approve a panel of outside advocates who could represent privacy and civil liberty concerns before the FISA court. Those advocates would be present for cases where the court was considering issues that were significant or raised an issue the court hadn't dealt with previously.
The president also called for lifting some of the secrecy surrounding the demands that might be sent to companies for data on customers involved in a national security investigation. The White House says those demands, called "national security letters," will no longer remain secret indefinitely, unless the government establishes a need for the secrecy when they are being used in an investigation.
Roughly 20,000 such letters are sent yearly by the FBI to banks, telecommunication companies and other businesses, but recipients are barred from disclosing anything about them. Obama wants to change that and allow some of the information to be made public.
Associated Press writers Stephen Braun, Nedra Pickler, Josh Lederman and Henry C. Jackson in Washington, Frank Jordans in Berlin and Stan Lehman in Sao Paulo contributed to this report.