The landmark USA Freedom Act was signed by the President Obama on Tuesday after it was passed by the senate,CNN reported.
The Senate voted in favour of it by 67-32, significantly reversing America's most controversial surveillance program since 9/11.
This act will force intelligence agencies to set up a system that will leave the telephone metadata with telecom companies rather than the government.
"After a needless delay and inexcusable lapse in important national security authorities, my Administration will work expeditiously to ensure our national security professionals again have the full set of vital tools they need to continue protecting the country," Obama was quoted as saying.
Just as important, enactment of this legislation will strengthen civil liberty safeguards and provide greater public confidence in these programs, including by prohibiting bulk collection through the use of Section 215, FISA pen registers, and National Security Letters and by providing the American people with additional transparency measures, he said.
The NSA's practice of bulk collection of Americans' data was disclosed by former contractor Edward Snowden.