The Department of Homeland Security is undergoing a major shake-up aimed at centralizing its analyses of terrorism intelligence and giving bioterrorism a higher priority, Secretary Michael Chertoff (search) announced on Wednesday.

Chertoff, while calling the actual organizational changes "modest," specifically called for the creation of an intelligence director and a chief medical officer to focus on bioterrorism — two areas where experts believe the department, which has been plagued with turf wars and growing pains, has lagged.

Chertoff ordered a review in March, shortly after he took the helm of the 180,000-person bureau, to ensure that the Department of Homeland Security (search) puts most of its resources into the nation's most vulnerable areas.

"Our department must drive improvement with a sense of urgency," Chertoff said. "Our enemy constantly changes and adapts, so we as a department must be nimble and decisive."

Chertoff announced an agenda that will focus on six priorities: preparedness, borders and immigration, transportation, information-sharing, management and organization.

"Over time, as intelligence warrants and progress allows, DHS will be open to change. We will be straightforward. If something goes wrong, we will not only acknowledge it, we will be the first to fix the error," Chertoff told a packed ballroom of lawmakers, department employees and other officials.

Chertoff opened his speech by offering condolences to the British people after the London bombings. He did not give any specifics about his plan to put systems detecting explosives, bioweapons, chemical weapons or radioactivity in the nation's rail, subway and bus systems.

He also renewed his pitch to retool terror-watch lists used to screen passengers on airline flights to eliminate what he called "an unacceptably high number of false positives."

Chertoff said the United States needs to improve its immigration system as part of bolstering border security. Though the department will deploy more personnel and technology at borders to deter illegal immigrants from entering the country, Chertoff said a newly approved temporary worker program should help migrants seeking jobs in the United States "into regulated legal channels."

He said he and Secretary of State Condoleezza Rice (search) will soon announce plans to ease visa hassles for foreigners entering the country to visit, work and study.

The Homeland Security secretary also pledged better oversight of private contracting practices in the department. But most of his recommendations Wednesday focused on a shaking up of Homeland Security's chain of command.

On preparedness, Chertoff said, "At the outset, we must acknowledge that although we have substantial resources to provide security, these resources are not unlimited. Therefore, we as a nation must make tough choices about how to invest finite human and financial capital to attain the optimal state of preparedness."

Dems: We Need More Than 'Bureaucratic Shuffling'

Some lawmakers who were briefed by Chertoff on Tuesday said the overhaul was headed in the right direction.

"Today should not be about restructuring, moving boxes around, it should be about capability — there's an anxious public out there who believes our government" can protect the nation's ports and railways, Rep. Jane Harman, ranking Democrat on the House Select Committee on Intelligence, told FOX News on Wednesday.

"We will never have 100 percent security, but we need better strategies," Harman, D-Calif., said. "I think, as Michael Chertoff talks today, that it has to be on his mind that the Homeland Security Department, the FBI and our agencies that work domestically have to be even more vigilant."

Rep. Harold Rogers, R-Ky., chairman of the House Appropriations Subcommittee on Homeland Security, called the restructuring plan a "welcome change."

"The reorganization seems to recall Congress' original intent in creating the department, which was to streamline all homeland security functions and build a single, cohesive unit that effectively and efficiently protects our nation," Rogers said in a statement. "I appreciate Secretary Chertoff's hard work and his determination to breakdown strongholds within the department and create a new culture that focuses on teamwork."

Others remained skeptical that bureaucratic reorganization would make the country safer.

"We appreciated him coming and talking to us, but ... at the end of the day you have to show Congress and the public [that] what you have done will in fact make us safer," said Rep. Bennie G. Thompson (search) of Mississippi, top Democrat on the House Homeland Security Committee. The committee was holding a hearing Thursday with Chertoff.

Thompson said Chertoff highlighted immigration and vulnerabilities at chemical and nuclear plants as top priorities.

Rep. Ed Markey, a Democrat from Massachusetts who has long been arguing for tighter cargo and aviation security, among other security measures, said the United States needs "risk-based homeland security action, not just risk-based bureaucratic shuffling."

"In the aftermath of the horrific attack on the London transit system, the Bush administration missed an important opportunity to announce new transit security policies that address glaring weaknesses in our subway, bus and rail systems here at home. Instead, the Department of Homeland Security announced bureaucratic plans, which will have no impact on the security of our public transit systems, chemical facilities, shipments of extremely hazardous materials or air cargo," Markey said in a statement. "The Bush administration should put forward real policy proposals to plug our homeland security vulnerabilities, instead of just moving people's offices around and changing the department’s stationery."

Meanwhile, the Senate was engaged in what promised to be a weeklong debate over the department's spending priorities.

Republican Sen. Judd Gregg of New Hampshire, who oversees domestic security spending, faced a fight with another senior GOP lawmaker over how much to increase funds for protecting mass transit after the London bombings.

Sen. Richard Shelby, R-Ala., had planned to offer a measure allocating $1.16 billion for commuter rail, subways and bus systems as part of a $31.8 billion bill drawing up the 2006 Homeland Security budget.

The bill currently sets aside $100 million for mass transit security (search) — $50 million less than was provided this year.

But Gregg, who chairs the Senate Appropriations homeland security panel and is managing the bill, said he would insist on simply doubling mass transit security spending, to about $200 million.

The House in May approved spending $150 million on transit security.

Cargo security also likely would be addressed by Chertoff's reorganization.

Efforts are being made to boost security in ports such as Long Beach, Calif., but Harman said they are not enough.

"We need a strategy for port security," she said. "I urged [Chertoff] today to roll out some of the specifics to make people have more faith that Homeland Security gets it."

Many of Chertoff's changes were recommended last year by experts at the Center for Strategic and International Studies and the Heritage Foundation, two Washington think tanks.

"The current organization is weighted with bureaucratic layers — there are still turf wars and there is no place for strategic thinking and policy making," said CSIS Homeland Security director David Heyman, who helped craft the recommendations.

Chief among the think-tank recommendations was the creation of an intelligence director to centralize the analysis of information gathered by 11 bureaus at DHS.

The director, who has not yet been appointed, will be asked to improve Homeland Security's standing within the intelligence community, where it is perceived as a junior partner and often left out of the loop.

Created in 2002 as a response to the Sept. 11, 2001, attacks, DHS was initially designed to be the government's chief center for analyzing terrorist threats, but an interagency office led by a CIA officer has assumed that role.

Homeland Security took 22 existing federal agencies under its umbrella when it started up in March 2003 — the largest U.S. government reorganization in 50 years.

A chief medical officer also was to be named to oversee bioterror policy and coordinate responses to biological attacks by the Centers for Disease Control and Prevention, which stockpiles vaccines and antidotes, and state and local officials.

Poor information flow between federal agencies during the Washington area's false anthrax scare earlier this year contributed to the decision to create this post, officials said.

A new undersecretary will oversee international affairs, strategic plans and work with the private sector. Chertoff also will elevate cybersecurity by assigning it to an assistant secretary, who also focuses on telecommunications.

Many in the tech community applauded the emphasis on cybersecurity.

"This is terrific news," said Harris Miller, president of the The Information Technology Association of America.

Miller said special challenges justify elevating the role of cybersecurity at DHS, among them creating and managing a national cyber-response system, a national program to reduce cybersecurity threats and vulnerabilities, a national cyber-awareness and training program and programs of coordination among federal, state and local governments as well as with the private sector and with international partners.

"We feel very strongly that an assistant secretary position has been needed to meet the growing public administration, resource and policy challenges related to cybersecurity. This means coordinating closely with, but outside of, physical security components," Miller said.

Eighty percent of the changes can be accomplished under Chertoff's existing authority; the remainder require congressional approval.

FOXNews.com's Liza Porteus and The Associated Press contributed to this report.