"Our collection agencies are often unable to gather intelligence on the very things we care the most about," the commission wrote.
At the top of its list of 74 recommendations, the commission urges President Bush to make sure John Negroponte, the new Director of National Intelligence, has the authority and backing to make much needed reforms in the U.S. intelligence community, reports CBS News White House Correspondent Mark Knoller.
The panel also said the FBI must be reformed to make maximum use of its intelligence capabilities by combining the bureau's counterterrorism and counterintelligence resources into a new office.
The report was the latest tabulation of intelligence shortfalls documented in a series of investigations since the terror attacks of Sept. 11, 2001 against the United States. Numerous investigations have concluded that spy agencies had serious intelligence failures before the attacks. Thursday's report concluded that the problem still has not been fixed, three years after al Qaeda struck America.
"The flaws we found in the intelligence community's Iraq performance are still all too common," it said.
Mr. Bush received the report in a meeting with commission members in the Cabinet Room where he was flanked by the panel's co-chairmen, Republican Laurence Silberman, a retired federal appeals court judge, and Democrat Charles Robb, a former senator from Virginia.
"The central conclusion is one which I share. America's intelligence community needs fundamental change," Mr. Bush said later in a news conference with the panel's co-chairmen.
Mr. Bush called the ideas in the report thoughtful and extremely significant. He said he had directed Fran Townsend, his White House-based homeland security adviser, to "review the commission's finding and to assure that concrete actions are taken."
After reading a prepared statement, the president then strode from the room, leaving Robb and Silberman behind to field questions on the report.
The chairmen agreed they had found no evidence that senior administration officials had sought to change the prewar intelligence in Iraq, possibly for political gain.
Robb said investigators examined every allegation "to see if there was any occasion where a member of the administration or anyone else had asked an analyst or anyone else associated with the intelligence community to change a position they were taking or whether they felt there was any undue influence. And we found absolutely no instance."
Robb was also particularly blunt when it came to turf wars within the intelligence bureaucracy. Negroponte "needs the full and unequivocal backing" of the president, he said, adding that there are "very distinguished and proud agencies whose culture will work against change."