"It is a rare occasion when a president can sign a bill he knows will save American lives. I have that privilege this morning," Bush said at a White House signing ceremony, flanked by top US military and intelligence officials.
"The bill I sign today helps secure this country, and it sends a clear message: This nation is patient and decent and fair, and we will never back down from the threats to our freedom."
Both houses of Congress last month passed the bill, which became a focus of the debate over security and civil liberties in Bush's war on terror launched after the September 11, 2001 attacks.
The measure was drafted in response to a US Supreme Court ruling in June that Bush had overstepped his powers and breached the Geneva Conventions by setting up special war crimes tribunals for "war on terror" suspects.
The sweeping legislation sets guidelines for interrogating suspected terrorists and would send several hundred inmates held at the US naval base in Guantanamo Bay, Cuba to trial after years of detention.
Since the opening of a US detention camp in Guantanamo Bay, Cuba, after the September 11 terrorist attacks, not one of the several hundred prisoners held there has been afforded a trial.
The new law authorises special military tribunals to prosecute the Guantanamo detainees, permits the Central Intelligence Agency's secret prisons, and forbids "cruel and unusual" punishment of detainees -- without further clarification of what falls in that category.
Detainees would be deprived of all legal recourse to protest the conditions of their detention.
Bush hailed the law as "one of the most important pieces of legislation in the war on terror."
"This bill will allow the Central Intelligence Agency to continue its program for questioning key terrorist leaders and operatives like Khalid Sheikh Mohammed, the man believed to be the mastermind of the September the 11th, 2001 attacks on our country."
"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," he said before putting his signature to the law.
Copyright AFP (Agence France-Presse), 2006