The most dramatic overhaul of the U.S. intelligence community in 50 years officially began Friday as President Bush (search) signed into law historic changes in the way American conducts its spy operations.

"Under this new law, our vast intelligence enterprise will become more unified, coordinated and effective," Bush said shortly before he signed the 563-page bill at the White House. "It will enable us to better do our duty, which is to protect the American people."

Congress passed the measure overwhelmingly, but not before some serious wrangling over budgetary power and immigration issues. The bill also aims to tighten borders and aviation security and creates a federal counterterrorism center and a new intelligence director.

Bush did not fill the new intelligence chief post at Friday's bill signing.

He thanked lawmakers Senate Majority Leader Bill Frist and House Speaker Dennis Hastert for making sure the bill received a vote, and also thanked Sens. Susan Collins of Maine and Joe Lieberman of Connecticut — authors of the Senate version — for steering the measure through that chamber. He also thanked several other lawmakers and administration officials for their work behind the scenes, as well as the Sept. 11 commission and the families of the victims of the terror attacks for encouraging passage of the bill.

"Thank you for working hard on this issue. Thank you for remembering your loved ones," Bush said.

Added Rep. Jane Harman, ranking Democrat on the House Permanent Select Committee on Intelligence: "Nothing we did would have succeeded without the 9/11 families, who were the moral force beneath our wings, and the unanimous bipartisan report of the 9/11 commission."

The new structure was designed to help the nation's 15 intelligence agencies work together to protect the country from attacks like the ones that killed nearly 3,000 people in New York, Virginia and Pennsylvania on Sept. 11, 2001.

Rep. Pete Hoekstra, R-Mich., chairman of the House Permanent Select Committee on Intelligence, said the measure better positions the United States to combat today's threats, instead of those posed during the Cold War-era.

"On Sept. 11, America was positioned to respond to threats posed by the U.S.S.R., not the type of international terrorism carried out on U.S. soil that day," Hoekstra said in a statement. "Despite the severity of the attacks to the U.S. homeland, the plan executed by those 19 hijackers provided only a glimpse of the type of destruction that terrorists wish to inflict upon the United States. We need to remember that terrorists only need to be right once. We need to be right every time."

The Sept. 11 commission (search), in its July report, said disharmony among the intelligence agencies contributed to the inability of government officials to prevent the attacks. The government failed to recognize the danger posed by Al Qaeda and was ill-prepared to respond to the terrorist threat, the report concluded.

"We face stateless [terror] networks, we face killers who hide in our own cities, we must confront deadly technologies," Bush said of the terror threat. "America's enemies need to be only right once, our intelligence and law enforcement and our government must be right every single time."

This bill will help the United States get it right, the president said.

"Our government is adapting to confront and defeat these threats," he said. "We're staying on the offensive against the enemy."

Commission members and families of attack victims lobbied persistently for the legislation through the summer political conventions, the election and a post-election lame duck session of Congress.

Will We Be Better Protected?

But the one big question is: Will America now be safer?

"It should make us safer, but look, there are challenges that we face," said Rep. Martin Meehan, D-Mass.

"Just passing a law doesn't necessarily mean the intention behind the law will be implemented," he added.

A new director of national intelligence, as well as general counsels, need to be chosen, Meehan pointed out.

"Then we need to see how these agencies work with each other," Meehan said. "It's implementing the law that's probably more important than the law itself.

"Legislation alone won't make us safer. We also need effective leadership," added Harman of California. "The president should pick a strong manager who will speak truth to power. I pledge to work closely with the new DNI to help make our country safer."

Another key issue the bill aims to resolve is that of turf battles and making sure various agencies communicate with each other. Lawmakers say it's up to the yet-to-be-named DNI to make sure those battles don't erupt.

"Now that we've done this shuffling, reshuffling, of the apparatus ... the key is people," House Armed Services Committee Chairman Duncan Hunter of California told FOX News. "Ultimately, it's going to depend on whether we have good leadership in these key positions, where not only do you have a mandate from the Congress and the president ... but you have the initiative and the leadership to do that. Hopefully, this will solve some of the fumbling of the football that we saw on 9/11."

Sen. Mark Dayton, D-Minn., said America would be "better off" if the new DNI could "knock heads" together to improve communication.

"The real results will come from the quality of the appointment and also how well they work together, and whether the president empowers this individual to shape our intelligence operations, or whether he'll just be a figurehead," Dayton said.

The bill was threatened over disagreements between the White House and key House Republicans about immigration issues and how the new national intelligence director would work with the nation's military.

House and Senate negotiators ultimately threw out provisions that would have posed obstacles for foreigners trying to get asylum in the United States, as well as provisions that would have limited the power of states to grant illegal immigrants driver's licenses.

Lawmakers have said that the more controversial immigration issues will be taken up when the new Congress comes into session early next year.

Bush was criticized for not engaging aggressively enough with members of his own party to break the impasse. Pundits questioned what that meant for the president's ability to gain approval from a Republican-controlled Congress for his ambitious second-term agenda.

But in the final days, he and Vice President Dick Cheney pushed hard for the legislation, and both the House and Senate passed it overwhelmingly.

Just as Bush changed his mind on supporting the creation of a Homeland Security Department and creation of the independent Sept. 11 commission, it took him a while to endorse the commission's strong recommendation that any new director of national intelligence have full budget-making control, necessary to wield true power in Washington. Bush at first rejected that idea but later supported it.

The new director position was one of the bill's most controversial aspects. Although the legislation gives the new director strong budget authority, its language is complex enough that there could be continued debate over the exact extent of the director's power.

Some names that have been mentioned for the post include CIA Director Porter Goss (search); Lt. Gen. Michael Hayden (search), the head of the National Security Agency; Deputy Secretary of State Richard Armitage (search); and White House homeland security adviser Fran Townsend (search).

The new law includes a host of anti-terrorism provisions, such as letting officials wiretap "lone wolf" terrorists and improving airline baggage screening procedures. It increases the number of full-time border patrol agents by 2,000 per year for five years and imposes new federal standards on information that driver's licenses must contain.

The measure is the biggest change to U.S. intelligence gathering and analysis since the creation of the CIA after World War II to deal with the newly emerging Cold War.

FOX News' Liza Porteus and The Associated Press contributed to this report.