President Bush signed a bill into law Friday that overhauls the way the American Red Cross governs itself and streamlines its leadership in an effort to avoid the type of problems that beset its response toHurricane Katrina.

The charity's 50-member board of governors, widely criticized as unwieldy, will be trimmed to no more than 25 members by 2009 and no more than 20 members by 2012.

The board henceforth will focus solely on governance and long-term oversight, not on regular operational decisions. All new members will be elected by the board itself; in the past, eight were appointed by the U.S. president and often had spotty attendance records at board meetings.

The bill also creates a new position of ombudsman, who will have unfettered access to all Red Cross operations and will provide annual reports to Congress.

"This day and this legislation are truly historic for the Red Cross as we better prepare ourselves to meet the challenges facing us not only today but most importantly, for tomorrow," said Bonnie McElveen-Hunter, who chairs the board.

The reforms were proposed last year by independent experts appointed by the Red Cross, which operates under a congressional charter. The changes are intended to ease recurring clashes between board members and Red Cross management, and to address complaints that the organization was at times too bureaucratic and unaccountable after Katrina struck the U.S. Gulf Coast in 2005 and the Sept. 11, 2001 terror attacks.

A member of the expert panel, Trinity University President Patricia McGuire, said the changes "will surely result in even better delivery of Red Cross services and support to the public in times of crisis."

She praised the board "for their courage to undertake difficult change."

The bill also was heralded by Sen. Charles Grassley, who led hearings last year that generated tough criticism of the Red Cross.

"The American people need the Red Cross. ... In turn, the Red Cross needs the financial and moral support of the American people," Grassley said. "By embracing reform, and wanting to improve its performance, the Red Cross is ensuring that its trust from the public is well-deserved."

Along with the governance changes, the Red Cross will soon have a new chief executive. Mark Everson is leaving his job as Internal Revenue Service commissioner to become Red Cross president on May 29. He replaces the interim president, Jack McGuire, who served in the post since Marsha Evans resigned in December 2005 because of friction with the board.

Everson's appointment has been hailed by Grassley and some other politicians, in part because of his work at the IRS tightening oversight of nonprofit organizations. Within the nonprofit sector, however, there has been some skepticism from critics who note that Everson, a former corporate executive, has no background in charity management or disaster response.