President Barack Obama is ordering changes to the US government's vast collection of phone records and promising that "we will not monitor the communications of heads of state and government of our close friends and allies".
The president said today he will end the programme "as it currently exists".
Mr Obama's highly anticipated speech, after months of revelations about US spying by former National Security Agency analyst Edward Snowden, said intelligence officials have not intentionally abused the programme to invade privacy.
But Mr Obama also said he believes critics of the programme have been right to argue that without proper safeguards, the collection could be used to obtain more information about Americans' private lives and open the door to more intrusive programmes.
He also sought to reassure allies and others overseas.
"The bottom line is that people around the world - regardless of their nationality - should know that the United States is not spying on ordinary people who don't threaten our national security, and that we take their privacy concerns into account. This applies to foreign leaders as well," he said.
He added: "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."
The leaks from Snowden, a fugitive now living in Russia, included revelations the US was monitoring the phone of German Chancellor Angela Merkel, sparking intense anger in Europe.
Mr Obama warned, however, that "we cannot unilaterally disarm our intelligence agencies." He added, "We know that the intelligence services of other countries - including some who feign surprise over the Snowden disclosures - are constantly probing our government and private sector networks."
But he said the US must be held to a higher standard. "No one expects China to have an open debate about their surveillance programmes, or Russia to take the privacy concerns of citizens into account," he said.
Mr Obama called for ending the government's control of phone data collected from millions of Americans. The move marks a significant change to the NSA's controversial bulk phone record collection programme.
Privacy advocates say moving the data outside the government's control could minimise the risk of unauthorised or overly broad searches by the NSA.
The move is expected to be met with criticism from some in the intelligence community, who have been pressing Mr Obama to keep the surveillance programmes largely intact.
His strategy would leave many of the specifics of intelligence-gathering changes to Congress, where politicians are at odds over the future of the surveillance.
Privacy groups have been pressing for guidelines that significantly narrow the amount of data collected from Americans.