It will implement the biggest US government reorganisation in a half century by folding into the new anti-terror department all or parts of 22 federal agencies, including the coast guard, secret service and border patrol.

But there was controversy over the new bill, when it was discovered that makers of leaky gas masks and potentially dangerous vaccines were shielded from the threat of a lawsuit in clauses tucked away in the sweeping package of legislation.

Seven provisions - which crept into the bill after the Republican victories in the mid-term elections - were widely condemned for pandering to major donors to the party, especially the drug industry.

The Bush administration says that the legal cover is necessary to encourage drug companies to develop antidotes to smallpox and other killers without fear of litigation.

Meanwhile the FBI admitted yesterday that a defunct watch list of people it wanted to question over the September 11 attacks has "taken on a life of its own" after being circulated to private companies who have used it to screen customers.

Thousands of names were passed on to the private sector in an operation codenamed Project Lookout, in an attempt to track those listed at a time when it was thought further attacks could be imminent. The list included many innocent citizens that the FBI thought might have information relating to suspects.