A new intelligence institution to be inaugurated soon by the Bush administration will allow government spying agencies to conduct broad surveillance and reconnaissance inside the United States for the first time.

Under a proposal being reviewed by Congress, a National Applications Office (NAO) will be established to coordinate how the Department of Homeland Security (DHS) and domestic law enforcement and rescue agencies use imagery and communications intelligence picked up by U.S. spy satellites.

If the plan goes forward, the NAO will create the legal mechanism for an unprecedented degree of domestic intelligence gathering that would make the U.S. one of the world's most closely monitored nations.

Until now, domestic use of electronic intelligence from spy satellites was limited to scientific agencies with no responsibility for national security or law enforcement.

The intelligence-sharing system to be managed by the NAO will rely heavily on private contractors including Boeing, BAE Systems, L-3 Communications and Science Applications International Corporation (SAIC). These companies already provide technology and personnel to U.S. agencies involved in foreign intelligence, and the NAO greatly expands their markets. Indeed, at an intelligence conference in San Antonio, Texas, last month, the titans of the industry were actively lobbying intelligence officials to buy products specifically designed for domestic surveillance.

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