The US House of Representatives has voted 338 for and 88 against ending the NSA's dragnet collection of telephone, email, and other online data from millions of Americans, a controversial program that was revealed in 2013 by former security contractor Edward Snowden.
The USA Freedom Act is seen as a big win for privacy and civil rights advocates. The White House backs the reforms, saying the Bill protects privacy while preserving essential national security authorities.
After passing the House, the measure is now heading for a vote in the Senate, where the clash between reformists and supporters of the intelligence community, coming within the context of warnings on the increasing digital reach of the Islamic State terror group, transcends party lines.
Both liberals and staunch conservatives, often at odds on most major legislation, have united in opposition against domestic spying by the National Security Agency.
The Bill, which focuses on people in the US and not overseas, would amend controversial sections of the USA Patriot Act, which was passed in the wake of the September 11, 2001, attacks and will expire on June 1.
The reforms scrap the bulk collection detailed in Section 215 of the Patriot Act, replacing it with a targeted program that allows intelligence agencies to collect data from specific individuals or groups, but only with prior approval of the secret national security FISA court.
The data dragnet was operating in complete secrecy after 2001, and has been under the supervision of the FISA court since 2006. It was consistently renewed by the administrations of George W Bush and Barack Obama.
Under Section 215, the government stored the acquired data, but the new reforms would compel telcos and other data companies to keep the information to be accessible to intelligence agencies only through court order.
"Today's vote was a major win for surveillance reform and a major rebuke for those who want to reauthorise the Patriot Act without change," said Center for Democracy & Technology president Nuala O'Connor.
Passage through the House was welcomed by Mozilla, whose head of public policy Chris Riley called for the Senate to swiftly pass the legislation.
"This legislation significantly curtails bulk collection under the Patriot Act and other authorities, and puts us on a path to a more private and secure internet," Riley said.
"We are staunchly opposed to any short- or long-term reauthorisation of these sections of the Patriot Act absent meaningful reforms. Now is not the time to delay on these much-needed reforms."
The Electronic Frontier Foundation (EFF) said US business is being hurt by the NSA's actions, and it hopes the Senate will add amendments to strengthen the Bill.
"The legislation is a good start to shutting backdoors," the EFF said. "The time to fix the backdoor problem is now."
The vote came just a week after a US appeals court ruled that the bulk data collection goes far beyond what congress authorised.
"The text of [section 215] cannot bear the weight the government asks us to assign to it, and that it does not authorize the telephone metadata program," wrote judge Gerard E Lynch last week.
Earlier this month, the French lower house approved legislation allowing authorities to spy on suspected terrorists without prior authorisation from a judge.
The new law, to go before the French Senate later this month, allows authorities to spy on the digital and mobile communications of anyone linked to a "terrorist" inquiry without judicial authorisation, and forces internet service providers and phone companies to give up data upon request.
Intelligence services will have the right to place cameras and recording devices in private dwellings and install keylogging devices.
As the US restricts some of its data surveillance schemes, Australia is in the midst of setting up its own data-retention scheme.
In this week's Australian Budget, AU$131 million was allocated by the government for the creation and maintenance of systems to store all Australians' telecommunications data for two years for warrantless access by law enforcement.
However, the money from the government is expected to cover only between one third and half of the cost to implement the scheme.
The Internet Society of Australia CEO Laurie Patton said the government should guarantee to top up the funding if it is inadequate for all ISPs.
"The government's original cost estimate was not based on widespread industry consultation, and the Internet Society is concerned that the costs have been significantly underestimated, especially in respect of small to medium-sized ISPs that don't have the resources to undertake the work in-house, and therefore will be required to pay for external assistance," he said in a statement.