The disclosure follows angry demands by lawmakers earlier in the day for a congressional inquiry into whether the monitoring by the highly secretive National Security Agency violated civil liberties.
"There is no doubt that this is inappropriate," declared Republican Sen. Arlen Specter of Pennsylvania, chairman of the Senate Judiciary Committee. He promised hearings early next year.
In a broad defense of the program put forward hours later, a senior intelligence official said the eavesdropping was narrowly designed to go after possible terrorist threats in the United States. The official said that, since October 2001, authorization for the program has been renewed more than three dozen times. On each occasion, the lawfulness of the program is certified by the president's legal counsel and the attorney general. It is then personally signed by Mr. Bush.
Administration officials insist they need an aggressive offense to fight terrorists, reports CBS News correspondent Bill Plante.
"Winning on the war terror requires winning the war of information," said Attorney General Alberto Gonzales.
Mr. Bush said in an interview that "we do not discuss ongoing intelligence operations to protect the country. And the reason why is that there's an enemy that lurks, that would like to know exactly what we're trying to do to stop them.
"I will make this point," Mr. Bush said. "That whatever I do to protect the American people — and I have an obligation to do so — that we will uphold the law, and decisions made are made understanding we have an obligation to protect the civil liberties of the American people."
The president spoke in an interview to be aired Friday evening on "The Newshour with Jim Lehrer."
Mr. Bush played down the importance of the eavesdropping story. "It's not the main story of the day," Mr. Bush told Lehrer. "The main story of the day is the Iraqi elections" for parliament which took place on Thursday.
Neither Secretary of State Condoleezza Rice nor White House press secretary Scott McClellan would confirm or deny the report which said the super-secret NSA had spied on as many as 500 people at any given time since 2002 in this country.
That year, following the Sept. 11 attacks, Mr. Bush authorized the NSA to monitor the international phone calls and international e-mails of hundreds — perhaps thousands — of people inside the United States, the Times reported.
McClellan said the White House has received no requests for information from lawmakers because of the report. "Congress does have an important oversight role," he said.
Before the program began, the NSA typically limited its domestic surveillance to foreign embassies and missions and obtained court orders for such investigations. Overseas, 5,000 to 7,000 people suspected of terrorist ties are monitored at one time.
"This is Big Brother run amok," declared Sen. Edward Kennedy, D-Mass. Sen. Russell Feingold, D-Wis., called it a "shocking revelation" that "ought to send a chill down the spine of every senator and every American."