The proposal, which requires approval by the lower House of Representatives, keeps the USA Patriot Act from expiring on December 31, but sets a timeframe for lawmakers to debate stronger civil rights safeguards sought by opposition Democrats.
President George W. Bush has championed a four-year renewal passed by the House this month, calling the law vital to fighting terrorism and lambasting the Senate delay as 'inexcusable'.
Congress passed the law four years ago in the immediate aftermath of the September 11 terrorist attacks on New York and Washington. It expands the powers of federal investigators to conduct searches and monitor phone conversation and e-mails of terrorism suspects.
Critics say it's time to review some of the provisions to give suspects more legal rights to contest FBI investigations.
The Senate approved the extension unanimously on a voice vote. The House vote's timing was unclear.
After days of impasse, the White House reportedly gave in as it became clear that it could not win the battle in a Congress about to head off into its year-end break.
Democratic Senator Patrick Leahy, a key negotiator, called the outcome a 'common-sense solution', the Washington Post reported.
Eight Republicans had joined 44 Democratic senators earlier Wednesday in calling on Republican leaders to end the standoff.
Concerns about U.S. investigators' methods gained steam last week with revelations that Bush secretly authorized the eavesdropping of private phone calls and e-mail after the 2001 terrorist attacks.
The directive circumvented the normal requirement that courts monitor and approve domestic intelligence gathering activities. The Washington Post reported Wednesday that a federal judge resigned from a court set up decades ago to oversee government surveillance to protest Bush's order.
Bush has steadfastly defended his decision as essential for national security and emphasizes that the practice goes to great lengths to protect civil liberties. He has lobbied hard to make the Patriot Act permanent.
But Democrats have used the revelations to strengthen their arguments against approving the Patriot Act.
Republican Senator Arlen Specter, chairman of the Senate judiciary committee, has vowed to investigate whether Bush's directive to the National Security Agency violated American laws.
