The administration has not yet formally unveiled the plan, but it was detailed in a New York Times story that was based on accounts from senior administration officials.
If Congress approves the plan, the NSA would no longer collect records about Americans' calling habits in bulk. Instead, the data would stay with phone companies, which would not be required to retain it any longer than they normally would.
A judge's order would be required before the NSA could obtain records of callers who are linked to a suspect. The order would require the companies to swiftly provide the data in a standard technological format and allow the government to obtain the phone records of people up to two calling links, or "hops," from a suspect, even if they had different providers.
Obama has also given Justice Department and intelligence officials a deadline of Friday to come up with a way to end bulk collection of phone data while preserving the program's utility.
Federal regulations generally require phone companies to retain call records for at least 18 months, though some choose to hold on to it longer. Among the issues the administration examined was whether to impose a longer retention mandate. Both the industry and privacy advocates opposed that idea.
Some longtime critics of the bulk collection greeted the White House's plan with praise.
"This is the start of the end of dragnet surveillance in America," said Sen. Ron Wyden, D-Ore. and a member of the Senate Intelligence Committee. He and several others, including Sens. Mark Udall, D-Colo., and Rand Paul, R-Ky., argued that the administration should end the existing program without waiting for congressional action.