WASHINGTON – President Bush yesterday endorsed a key provision of the September 11 commission’s recommendations, agreeing to give his proposed national intelligence directorate authority over most of the $40 billion budget for the intelligence community.

“We believe that there ought to be a national intelligence director who has full budgetary authority,” Mr. Bush said. “We’ll talk to members of Congress about how to implement that.”

The president’s announcement moves the government much closer to the creation of a new intelligence czar that would oversee operations of the 15 various agencies in the intelligence community.

The president’s revised plan would give the new directorate significant new powers, such as setting collection priorities for the CIA, the Defense Intelligence Agency, and other departments charged with collecting intelligence.

At the same time, the budgets for the agencies charged with launching spy satellites, processing and analyzing the information collected from those satellites, and intercepting electronic communications, would remain under the purview of the Pentagon.

Defense Secretary Rumsfeld has said he opposed the creation of a directorate that would have budget control over the agencies assigned to his building because many of those agencies are critical for making military decisions.

A statement from the White House yesterday said the president’s proposal would “keep the national intelligence agencies – National Security Agency, National Geospatial-Intelligence Agency, and National Reconnaissance Office – under the Department of Defense, thereby avoiding the disruption of the war effort that a more far-reaching restructuring could create.”

On Tuesday, Senator Lieberman, a Democrat from Connecticut, and Senator McCain, a Republican from Arizona, proposed a bill that would give the new intelligence director budgetary control over the NSA, NGA and NRO. Both lawmakers said yesterday they welcome the president’s plan.

Soon after the president made those remarks, his FBI director, Robert Mueller, warned that any reorganization of the intelligence community should not move the counterterrorism functions from his bureau to a new directorate. He also said the intelligence collection functions of his bureau should fall under the budget of the new director.

Specifically he urged Congress to understand that his agents needed to be able to combine intelligence from criminal and counterterrorist investigations. “Terrorists are also criminals,” he said.

Mr. Mueller also warned that a new National Intelligence Directorate “should not be directly responsible for the conduct of operations. The role of the NID should, instead, be to ensure that appropriate activities and operations are conducted by the constituent elements of the Intelligence community.”

In the same hearing, the acting CIA director, John McLaughlin, said, “Now that the president has committed to create a national intelligence director, my sole interest is in ensuring that such an individual can succeed.”

Last month, Mr. Bush nominated former CIA operations officer and Florida Republican lawmaker Porter Goss to be the director of central intelligence, replacing George Tenet, who stepped down from the job in July. Mr. Goss is rumored to be a candidate for the more powerful proposed national intelligence director post.

Leaders in both the House and Senate have recently pledged to legislate the most sweeping reorganization of the intelligence community since the creation of the CIA in 1948 under the National Security Act.

“Every day that Congress spends not doing the 9/11 recommendations is a day we ignore the threat and neglect our solemn duty as leaders,” Senate Minority Leader Tom Daschle, a Democrat from South Dakota, said yesterday.

The drive to reorganize intelligence in this election year comes after the September 11 commission unanimously endorsed the creation of a national intelligence directorate to oversee the budgeting and tasking of America’s intelligence collection.

The commission’s final report was particularly critical of the FBI and CIA for failing to share key information that may have led to the disruption of the terror plot. The panel concluded that a problem facing the intelligence community was that there were too many intelligence bureaucracies that did not cooperate.

The national security adviser for Senator Kerry, the Democratic presidential nominee, dismissed Mr. Bush’s announcement.

“If George W. Bush were serious about intelligence reform, he’d stop taking half-measures,” said the adviser, Rand Beers, who worked in Mr. Bush’s national security council as the senior director for counterterrorism, but quit on the eve of the Iraq war in March.

Senator Frist, a Republican of Tennessee, endorsed the president’s plan yesterday saying it gave the director “sufficient authority to not be a figurehead and really manage intelligence.”

The president’s proposal would also give the new national intelligence director an effective veto on the appointment of personnel in the agencies this person would oversee.

A summary of the proposal released yesterday says, “If the appointment is made by an agency head, the agency head must receive the concurrence of the National Intelligence Director. If the appointment to such position is made by the president, any recommendation to the president to nominate or appoint an individual to that position shall be accompanied by the recommendation of the national intelligence director.”

The new intelligence director would serve at the pleasure of the president, but would also be approved through the advise and consent process of Congress. The new director would not be a cabinet level official.

Mr. Bush also announced the creation of a Joint Intelligence Community Council that would advise the new director in setting intelligence policy.

A statement from the White House said the new body would “help ensure the implementation of a joint, unified national intelligence effort to protect national and homeland security.”