President Barack Obama has said he is ordering a "transition" that will end the US government's bulk collection of phone metadata "as it currently exists".
Mr Obama announced the change following a months-long review spurred by former National Security Agency analyst Edward Snowden's leaks about secret surveillance programmes.
"Effective immediately, we will only pursue phone calls that are two steps removed from a number associated with a terrorist organisation instead of three," the president said.
Critics of US spying programmes have rallied in support of Snowden He also said he instructed the intelligence community to develop options for a new approach that can match the capabilities of the existing surveillance programme without the government holding onto the metadata.
"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," Mr Obama said.
The president also warned that the transition would "not be simple".
He said the surveillance review panel's recommendation that data providers or a third party be responsible for holding the bulk data presented potential risks.
"Relying solely on the records of multiple providers, for example, could require companies to alter their procedures in ways that raise new privacy concerns," he said.
People demonstrate in Washington against NSA surveillance tactics Mr Obama also announced on Friday a new directive banning US government spying on dozens of foreign heads of state and governments considered to be US allies.
He said 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".
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