President Bush has decided not to reauthorise the government's domestic spying programme in its present form, the White House has said.
The government argued a swift response was needed in the "war on terror"
The controversial programme, launched after 9/11, allowed the monitoring of international calls or e-mails to or from the US without a court warrant.
Critics argued that this violated the US constitution and legal safeguards.
The government is now seeking approval from a special court for wiretaps, Attorney General Alberto Gonzales said.
"The president has determined not to reauthorise the Terrorist Surveillance Programme when the current authorisation expires," Mr Gonzales wrote in a letter to the Senate Judiciary Committee.
On 10 January, the Foreign Intelligence Surveillance Court had granted a request to monitor communications of a person believed to be linked to al-Qaeda or an associated group, his two-page letter explained.
As a result, any electronic surveillance that was taking place would now be conducted subject to the court's approval, Mr Gonzales wrote.
He said that although the Terrorist Surveillance Programme was lawful, the Bush administration had long been seeking ways of working with the court.
Mr Bush authorised the secret intercept scheme in 2001 after the 11 September attacks but it did not come to light until December 2005 when it was uncovered by the New York Times newspaper.
Under the programme, international phone calls and e-mails to or from the US could be wiretapped without the need for a warrant, if the person or people involved were suspected of having terrorist links.
Normally the National Security Agency was required to obtain a warrant from the special surveillance court before eavesdropping on someone in the US.
Critics of the programme said it circumvented legal safeguards designed to balance civil liberties with the need to gather foreign intelligence.
They also argued that President Bush had exceeded his powers.
The Bush administration had defended the warrantless programme, saying the procedure for obtaining authorisation to eavesdrop on terrorist suspects was too slow and cumbersome.
The White House has said it is satisfied that the Foreign Intelligence Surveillance Court will operate in a way that meets concerns about national security.
"The Foreign Intelligence Surveillance Court has put together its guidelines and its rules and those have met administration concerns about speed and agility when it comes to responding to bits of intelligence where we may be able to save American lives," White House press secretary Tony Snow said.
Senator Patrick Leahy, who chairs the Senate Judiciary Committee, welcomed the announcement that approval for all wiretaps would be sought from the court, "as the law has required for years".
"The issue has never been whether to monitor suspected terrorists but doing it legally and with proper checks and balances to prevent abuses", Mr Leahy said.