Signing the Bill, Mr Bush described it as a "vital tool" in the fight against terrorism, but civil liberty campaigners said that it would allow prisoners to be held indefinitely and sentenced to death on evidence beaten out of them.

Officially the Military Commissions Act protects detainees from blatant abuses during questioning such as rape, torture and "cruel and inhuman" treatment, but it does not require that any of them be granted legal counsel. Mr Bush said that it was "fair, lawful and necessary".

In signing the Bill, which comes just three weeks before mid-term congressional elections, the President has underlined his party's efforts to keep the fight against terrorism at the centre of the political battleground. The legislation is opposed by many Democrats, who say that it eliminates fundamental American rights.

Religious groups staged a protest outside the White House as the Bill was being signed. Protesters shouted "Bush is the terrorist" and "Torture is a crime". Those who refused to move were arrested by police.

The swift implementation of the legislation is hopeful for Mr Bush in light of the mounting casualties and daily violence faced by troops in Iraq. Lawmakers have increasingly been calling for a change of strategy and political anxieties could jeopardise the chances of the Republicans retaining control of Congress in the November 7 elections.

"With the Bill I'm about to sign, the men our intelligence officials believe orchestrated the murder of nearly 3,000 innocent people will face justice," Bush said, referring to the September 11 attacks.

Among those the United States hopes to try are Khalid Sheikh Mohammed, accused of being the mastermind behind the 9/11 attacks, as well as Ramzi Binalshibh, an alleged hijacker, and Abu Zubaydah, who was believed to be a link between Osama bin Laden and many al-Qaeda cells.

"It is a rare occasion when a President can sign a bill that he knows will save American lives," Bush said. "I have that privilege this morning."

The President, who signed the Bill at a table with a sign on it saying "Protecting America", acknowledged that the law came amid dispute.

Many Democrats opposed the legislation because they said it eliminated rights of defendants considered fundamental to American values, such as a person's ability to go to court to protest their detention and allowed the use of coerced testimony as evidence.

Mr Bush said: "Over the past few months, the debate over this bill has been heated and the questions raised can seem complex.

"Yet, with the distance of history, the questions will be narrowed and few. Did this generation of Americans take the threat seriously? And did we do what it takes to defeat that threat?"

The American Civil Liberties Union said the new law is "one of the worst civil liberties measures ever enacted in American history."

"The President can now, with the approval of Congress, indefinitely hold people without charge, take away protections against horrific abuse, put people on trial based on hearsay evidence, authorise trials that can sentence people to death based on testimony literally beaten out of witnesses, and slam shut the courthouse door for habeas petitions," said Anthony D. Romero, the ACLU executive director.

"Nothing could be further from the American values we all hold in our hearts than the Military Commissions Act," he said.

Mr Bush needed the legislation because the Supreme Court said in June that the administration's plan for trying detainees in military tribunals violated US and international law.

The legislation, which sets the rules for court proceedings, applies to those selected by the military for prosecution. It will leave the majority of the 14,000 prisoners in US custody unaffected.

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