The US Senate has refused to renew key provisions of the Patriot Act, which is due to expire at the end of the year.
The Senate concluded that sections of the anti-terror legislation, passed in the wake of the 11 September attacks, infringed too much on the privacy of Americans.
The most controversial of the provisions involve the government's ability to conduct wire taps and search the records of private citizens in public amenities such as libraries and hospitals.
US President, George W Bush, today admitted that he had authorised the use of highly secret wiretaps by the NSA, saying the wiretaps had saved American lives in the 'war on terror'.
In a televised address, Bush confirmed media reports that he had authorised the interception of communications by people living in the US who are suspected of terrorist activities.
The New York Times had reported that Mr Bush allowed the NSA to monitor the international telephone calls and e-mail messages of hundreds, perhaps thousands, of people inside the US.
Meanwhile, a key Republican in Congress has lifted the final block on a bill that proponents say will formally ban the use of torture on detainees held by US forces anywhere in the world.
The campaign for the ban has been led by Senator John McCain, a Vietnam War veteran, who secured a landmark agreement on the ban after the White House had lobbied against the measure.
