Under Obama's plan, the government will no longer be able to gain access to phone records beyond two "hops" from the person they are targeting. That means the government can't examine records for someone who called someone who called someone who called the suspect.
Privacy advocates said they were troubled that Obama's proposals did not go further.
"He seems to endorse amending bulk data collection but not ending it," said Anthony Romero, the executive director of the American Civil Liberties Union.
The president cast the changes as a pre-emptive attempt to curb possible government abuse as new technologies give intelligence agencies the ability to round up more information more quickly. But he said there was nothing in the White House review that "indicated that our intelligence community has sought to violate the law or is cavalier about the civil liberties of their fellow citizens."
Obama mentioned Snowden and his disclosures in negative but measured language.
"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," he said.
Anger with the U.S. after Snowden's revelations has been particularly strong abroad, especially when it was revealed that the Americans were monitoring the communications of friendly foreign leaders such as Merkel and Brazil's President Dilma Rousseff. Obama said new guidelines will cut back on such monitoring, except when there is a compelling national security interest.
"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," said Obama, who also called on the Justice Department to look for ways to extend privacy protections to foreign citizens.
The president's assurances were welcomed by officials in Europe, though they cautioned that details of the plans still needed to be analyzed.
"The government continues to expect that German law be respected on German territory, including and particularly by our close partner," said Steffan Seibert, a spokesman for Germany's government.
The reaction was not as warm in Brazil. Vanessa Grazziotin, a Brazilian politician investigating U.S. spying there, said, "The spying on friends and allies should have never happened."
Many of the president's recommendations were aimed at increasing the American public's trust in the spying operations. He called on Congress to approve a panel of outside advocates who could represent privacy and civil liberty concerns before the FISA court. Those advocates would be present for cases where the court was considering issues that were significant or raised an issue the court hadn't dealt with previously.
The president also called for lifting some of the secrecy surrounding the demands that might be sent to companies for data on customers involved in a national security investigation. The White House says those demands, called "national security letters," will no longer remain secret indefinitely, unless the government establishes a need for the secrecy when they are being used in an investigation.
Roughly 20,000 such letters are sent yearly by the FBI to banks, telecommunication companies and other businesses, but recipients are barred from disclosing anything about them. Obama wants to change that and allow some of the information to be made public.
Associated Press writers Stephen Braun, Nedra Pickler, Josh Lederman and Henry C. Jackson in Washington, Frank Jordans in Berlin and Stan Lehman in Sao Paulo contributed to this report.
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