President Barack Obama banned U.S. eavesdropping on the leaders of close friends and allies on Friday and began reining in the vast collection of Americans' phone data in a series of reforms triggered by Edward Snowden's revelations.

In a major speech, Obama took steps to reassure Americans and foreigners alike that the United States will take into account privacy concerns that arose after former U.S. spy contractor Snowden's damaging disclosures about the sweep of monitoring activities of the National Security Agency (NSA).

"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," he said.

Obama promised that the United States will not eavesdrop on the heads of state or government of close U.S. friends and allies, which a senior administration official said would apply to dozens of leaders.

The step was designed to smooth over frayed relations between, for example, the United States and Germany after reports surfaced last year that the NSA had monitored the mobile phone of German Chancellor Angela Merkel. Brazilian President Dilma Rousseff postponed a state visit to Washington to protest U.S. tactics.

Last month, documents leaked by Snowden shed light on a list of surveillance targets used by British and American intelligence services, which include former Israeli Prime Minister Ehud Olmert and former Defense Minister Ehud Barak.

A 2009 document cited in the report, published in the Guardian newspaper, shows that one of the targets under surveillance included the Israeli prime minister at the time, Ehud Olmert. The Guardian added: "Three other Israeli targets appeared on GCHQ documents, including another email address understood to have been used to send messages between the then Israeli defense minister, Ehud Barak, and his chief of staff, Yoni Koren.



"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," Obama said.

Obama is trying to balance public anger at the disclosure of intrusion into Americans' privacy with his commitment to retain policies he considers critical to protecting the United States.

The steps Obama put in motion are aimed at adapting regulations to keep up with rapid changes in surveillance technology that permit NSA analysts to monitor private communications globally.

Among the list of reforms, Obama called on Congress to establish an outside panel of privacy advocates for the secret Foreign Intelligence Surveillance (FISA) Court that considers terrorism cases. The former chief judge of the FISA court had opposed such a step.

While the speech was designed to address concerns that U.S. surveillance has gone too far, Obama's measures were relatively limited.

One of the biggest changes will be an overhaul of the government's handling of bulk telephone "metadata." He said the program will be ended as it currently exists.

In a nod to privacy advocates, the government will not hold the bulk telephone metadata, a decision that could frustrate some intelligence officials.

In addition, Obama said the U.S. the government will need a judicial review before the database, which lists millions of telephone calls, can be queried unless there is a true emergency.

Obama also decided that communications providers would be allowed to share more information with the public about government requests for data.

While a presidential advisory panel had recommended that the bulk data be controlled by a third party such as the telephone companies, Obama did not plan to offer a specific proposal for who should store the data in the future.

Obama has asked Attorney General Eric Holder and the intelligence community to report back to him before the metadata program comes up for reauthorization on March 28 on how to preserve the necessary capabilities of the program, without the government holding the metadata.

Obama made clear that his administration's anger at Snowden's revelations has not abated. Snowden, living in asylum in Russia, is wanted on espionage charges, although some Americans would like him to be granted amnesty for exposing secrets they feel needed to be made public.

"The sensational way in which these disclosures have come out has often shed more heat than light, while revealing methods to our adversaries that could impact our operations in ways that we may not fully understand for years to come," Obama said, mentioning the former NSA contractor by name.

Obama said U.S. intelligence agencies will only use bulk collection of data for fighting terrorism protecting U.S. troops and allies, and combating crime.