Updated

FBI Director Robert Mueller (search) on Thursday proposed the creation of an intelligence service within the FBI (search), a move aimed at heading off calls for a new stand-alone domestic spy agency.

Mueller told a House subcommittee that a new agency would be wasteful, duplicating much of the expertise already in the FBI and making it more difficult for the bureau to carry out its priority assignment of fighting terrorism.

"Any reform proposal must recognize that intelligence is fundamental to successful FBI operations," he said. "Intelligence functions are woven throughout the fabric of the bureau, and any changes to this integrated approach would be counterproductive."

If a separate agency were to be established, Mueller said, the FBI would have to wonder "when the intelligence agency will throw information over the transom to a law enforcement agency."

Some members of Congress question whether an agency devoted for decades to law enforcement can make intelligence a mission of equal or greater importance. Sen. John Edwards (search), D-N.C., has been pushing for a new Homeland Intelligence Agency that would have no law enforcement duties or powers.

His proposal would set up an organization similar to Britain's Security Service, known as MI5, which collects, analyzes and disseminates intelligence aimed at disrupting terrorism, espionage and sabotage directed against Britain. It has no law enforcement powers.

Mueller has been battling hard to squelch the idea. Former FBI Director Louis Freeh; current Attorney General John Ashcroft and his predecessor, Janet Reno; and CIA Director George Tenet all have recommended against a new homeland spy agency.

Testifying before a House Appropriations subcommittee, Mueller said a new agency would have to duplicate the FBI's surveillance activities and translators, and replicate the bureau's relationship with local law enforcement agencies.

He proposed that a new directorate of intelligence be established within the bureau with clear authority over intelligence activities.

It was not immediately clear whether a new intelligence service would require additional manpower and resources.