National Security Agency head Lt. Gen. Michael Hayden (search) will be Negroponte's deputy.
If confirmed by the Senate, the new official will oversee 15 separate intelligence agencies, including the CIA, a responsibility the president called "straightforward and demanding."
"John will make sure that those whose duty it is to defend America have the information they need to make the right decisions," the president said in making the announcement, adding that after spending his life in foreign service, Negroponte understands America's global intelligence needs.
"John's nomination comes at a historic moment for our intelligence agencies," Bush said. "Intelligence is our first line of defense. If we're going to stop the terrorists before they strike, we must ensure our intelligence agencies work as a single, unified enterprise."
Negroponte, declaring he was "honored" to be chosen for the job, said that overseeing and reforming the nation's intelligence apparatus will be a "critical national task ... critical to our international posture, critical to the prevent of international terrorism and critical to our homeland security.
"I appreciate your confidence in choosing me for what will no doubt be the most challenging assignment I have undertaken in more than 40 years of government service," Negroponte added.
Various lawmakers on Capitol Hill criticized the president on Wednesday for not having already chosen a person as a director of national intelligence. Bush technically had until June 17 to pick a DNI. His choice came exactly two months after the legislation was made law.
"This is a position of critical importance and the president wanted to make sure he gets it right," McClellan said Thursday, explaining the delay in making a choice. "This individual will have the full authority to do the job that needs to be done and will have the full confidence of the president of the United States."
"Many of us have been worried, quite frankly, that the administration took two months to do this. That's rather cavalier and complacent," former Indiana Rep. Tim Roemer (search), a member of the Sept. 11 commission that recommended the position, told FOX News shortly before Negroponte was formally nominated.
Between the fear that Al Qaeda, Usama bin Laden and other terrorist groups may be trying to get their hands on nuclear weapons and remarks made Wednesday from FBI Director Robert Mueller that he's worried about sleeper cells here in the United States, Roemer said a new DNI is needed as soon as possible.
"We've got to have a DNI that can try to help bring and coordinate the CIA and the FBI and help them work together on the overseas threat and the domestic threat," as well as on intelligence budgets, Roemer said.
Senate Intelligence Committee Chairman Pat Roberts, R-Kan., whose panel will hold Negroponte's confirmation hearing, said nuclear terrorism will be a priority issue for the new DNI.
A Diplomatic Negroponte
CIA Director Porter Goss (search) called the nomination of Negroponte "a critical step in continuing to strengthen our intelligence community and to create even better coordinated working relationships and communications between the agencies."
"These men are excellent choices. I have worked with Ambassador Negroponte and General Hayden extensively and hold them in the highest regard," he added.
But Negroponte may appear to be somewhat of an unusual choice, some observers said.
"He has stature ... what he doesn't have is expertise in intelligence," said Walter Pincus, senior writer with The Washington Post. "He's been an ambassador, he's dealt with intelligence but he's never served in any of the intelligence agencies."
Bush responded to questions about the appropriateness of the choice by saying that Negroponte can maneuver through bureaucratic Washington because of a strong familiarity with using prior intelligence reports.
"He's a diplomat ... he understands the power centers of Washington, he's been a consumer of intelligence ... he's got a good feel for how to move this process forward to address the different interests," Bush said.
Lawmakers from both sides of the aisle said Hayden, a former National Security Agency chief, and Negroponte, a career diplomat, should receive overwhelming support from Capitol Hill.
"I'm enthusiastic …he stands sort of midpoint between the military and the intelligence world … and he has as his deputy someone who knows more about the collection of intelligence than anybody else on Earth ... they have very good chemistry, I think they'll make a very good team," Sen. Jay Rockefeller, the ranking Democrat on the Senate Intelligence Committee, told FOX News. "He'll get confirmed, I think, easily and quickly."
Senate Majority Leader Bill Frist said he hopes to move the nomination "quickly" through the Senate.
"President Bush's nomination of Ambassador Negroponte is a critical step toward revamping America's intelligence agencies and securing our nation against terrorism," the Tennessee Republican said in a statement. "John Negroponte's distinctive and extensive set of skills and experience clearly qualify him to run our intelligence community. His character and qualifications befit the significance of this new position. "
Sen. Trent Lott, R-Miss., said although he was concerned that two months had gone by without a DNI being named, "I think the president took his time, came up with the right man and his deputy.
"I think this is a really good choice. I think it's going to be well received by Republicans and Democrats," Lott told FOX News.
Addressing the question as to whether Negroponte has enough intelligence experience, Lott said: "You don't serve as ambassador in as many different places he has — critical positions in South America and Asia and of course, Iraq. Ambassadors deal a lot with the intelligence community … he also has enough credibility to ... provide the leadership we need in intelligence."
He added: "It's going to be a tough job but that's what intelligence reform is all about."
Sen. Charles Schumer, D-N.Y., reacting to the news, said, "The number one problem that has plagued our domestic War on Terror is that the individual agencies responsible for intelligence gathering still don't share. It is my hope that the president will give the resources and authority to Ambassador Negroponte to turn things around in our disconnected intelligence community."
House Minority Leader Nancy Pelosi, D-Calif., however, said she is thankful Negroponte will be in the business of collection, analysis and dissemination of information, and not a policy maker or Cabinet officer.
"As one who has disagreed with Ambassador Negroponte for over 20 years, I am pleased that he is in a position now that doesn't have anything to do with policy."
Some Sept. 11 families also are skeptical.
"While Mr. Negroponte has a long history of holding diplomatic posts, we have serious reservations about Mr. Negroponte's skills and experience in the intelligence arena," said a statement from the Sept. 11 Advocates (search), which include widows such as Kristen Breitweiser (search).
"After hearing yesterday's grim threat assessment from CIA Director Porter Goss and FBI Director Robert Mueller that we are going to be attacked again, we question whether Mr. Negroponte is the best person suited for this job. His resume is strongly tilted towards years of diplomatic service and is clearly lacking in recent intelligence community experience. Such a resume does not seem to afford Mr. Negroponte the ultimate skills required by this nations top intelligence post."
As ambassador to the United Nations, Negroponte helped win unanimous approval of a Security Council resolution that demanded Iraqi leader Saddam Hussein comply with U.N. mandates to disarm. Negroponte worked to expand the role for international security forces in Afghanistan after the overthrow of the Taliban government.
Negroponte's confirmation to the United Nations post was delayed a half-year mostly because of criticism of his record as the U.S. ambassador to Honduras from 1981 to 1985. In Honduras, he played a prominent role in assisting the Contras in Nicaragua in their war with the left-wing Sandinista government.
Human rights groups alleged that Negroponte acquiesced in human rights abuses by Honduran death squads funded and partly trained by the CIA. Negroponte testified during the hearings for the U.N. post that he did not believe death squads were operating in Honduras.
Reforming the Intelligence Community
Congress approved the position of a DNI as part of the intelligence reform bill signed into law in December — the most sweeping intelligence legislation in over 50 years.
Both skeptics and hopefuls say the new director has more than a few challenges ahead — from turf battles at the major intelligence and national security agencies to bureaucratic resistance and the ultimate test of wielding the authority needed to transform the nation’s intelligence capabilities.
"He’s going to have to be a skull-cracker, that’ll make the difference," said Amy Zegart, a professor of public policy at UCLA, former student of now-Secretary of State Condoleezza Rice and award-winning author of "Flawed By Design: The Evolution of the CIA, JCS and NSC."
"It’s equally possible, it will be a disaster," Zegart said.
Intelligence analysts say the appointee must be willing to take charge decisively.
"It will have to be a strong person who will demand respect to get things done," said Thomas Carroll, a former officer in the CIA’s clandestine service, who now runs Carroll Associates in California.
Bush said the new DNI would be the principle adviser to the president on intelligence matters and asserting that the director could move intelligence assets around the globe as needed to keep an eye on terrorist groups like Al Qaeda.
The intelligence reform bill allows the new DNI authority over the national intelligence budget, but not the approximately 30 percent of the budget that falls under the Pentagon’s purview. In that case, the director will participate in drafting the budget, but will have not final say in it. As for the rest of the budget, the director will have control, but requests to reprogram funds will have to be approved by the Office of Management and Budget.
Zegart said the role of the DNI is a far cry from the initial blueprint envisioned by the Sept. 11 commission and embraced by a lobby of family members of victims of the attacks.
"The reality is that in any legislation, it is all about interpretation and loopholes and this legislation is vague enough that the Defense Department will have a major say," said Zegart. "It’s a long way from where we started."
Rep. Christopher Cox, R-Calif., chairman of the House Homeland Security Committee, told FOXNews.com this week that the job won't be easy.
"The enormous statutory authority given to the intelligence director notwithstanding, that person would be well served to be versed in diplomacy and diplomatic maneuvering," he said.
FOX News' Kelley Beaucar Vlahos and Liza Porteus and The Associated Press contributed to this report.