The plan would store the data outside of government while allowing access for national security reasons, officials said.
President Barack Obama -- in The Hague for a nuclear security summit -- called the plan "workable" and said it "addresses the two core concerns that people have" about the NSA's surveillance.
The president also told a press conference that the reform "ensures that the government is not in possession of that bulk data."
Obama said there were "clear safeguards" against any abuse of the NSA's authority but added: "I recognize that people were concerned about what might happen in the future with that bulk data."
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A senior administration official said earlier that Obama had considered the results of a study he ordered in January into how the NSA could protect national interests without storing citizens' private data.
The comments came after reports in the New York Times and Washington Post that a major reform of data collection by US intelligence agencies was imminent.
A trove of documents leaked by fugitive former NSA contractor Edward Snowden sparked outrage in the United States and abroad about the vast capabilities of America's intelligence programs.
Officials have defended the methods as necessary to thwart terror attacks but US public opinion was shocked by the extent of the NSA's activities on home soil.