The commutation, which drastically reduced Libby's punishment, is just short of a presidential pardon, which would have exonerated Libby and wiped the conviction from his record.

The key adviser to Cheney and an architect of the Iraq war, Libby was convicted March 6 in federal court. A jury found him guilty of lying to prosecutors who were trying to determine if top Bush administration officials leaked the identity of former CIA operative Valerie Plame Wilson -- purported retaliation for her husband's contention that the Bush administration twisted intelligence facts to justify the 2003 invasion of Iraq.

"I respect the jury's verdict," Bush said in a statement announcing his decision. "But I have concluded that the prison sentence given to Mr. Libby is excessive."

While the president has the right to pardon convicted criminals and commute prison sentences, such actions are rare, and normally are taken after a thorough investigation by the Department of Justice. Bush, however, said in his statement that he made the decision personally.

The president noted that Libby's supporters believe the punishment does not fit the crime, while his critics point to the fact that he was convicted of perjury and obstructing justice in an open court. While both sides "have made important points, I have made my own evaluation," Bush said.

Democratic Party leaders, including several of the party's presidential candidates, were outraged, saying the commutation shows disrespect for the judicial system and smacks of a different legal standard for Bush's top aides.

In a statement issued last night, Senate majority leader Harry Reid called Bush's decision "disgraceful," adding that Libby's jury trial and conviction "was the one faint glimmer of accountability for White House efforts to manipulate intelligence and silence critics of the Iraq War. Now, even that small bit of justice has been undone."

But House Republican whip Roy Blunt applauded the decision, saying, "President Bush did the right thing today in commuting the prison term for Scooter Libby. The prison sentence was overly harsh and the punishment did not fit the crime. The sentence was based on charges that had nothing to do with the leak of the identity of a CIA operative."

Libby's lawyer, William Jeffress , said he was pleased by the president's decision. "The prison sentence was imminent, but obviously the conviction itself is a heavy blow to Scooter," he told the Associated Press.

The case against Libby, authorities say, stemmed from a White House decision to play hardball with critics who challenged their reasoning for the war. Cheney was particularly incensed at a New York Times opinion article by Joseph Wilson, Plame Wilson's husband, a retired ambassador who accused the administration of exaggerating the security threat in Iraq.

As the White House was preparing its case for war, the CIA asked Wilson, a retired ambassador who had served in Africa, in 2002 to check out reports that Niger had sent materials for a nuclear weapon to Iraq. Upon returning, Wilson told the CIA he found no evidence of such a transfer.

Nonetheless, Bush said in his 2003 State of the Union speech that the British government "has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

In July 2003, Wilson wrote an op-ed piece for The New York Times stating that the intelligence the president cited in his speech had been "twisted" to exaggerate the Iraqi threat and convince Congress and the nation that war was necessary. According to evidence introduced during the trial, Cheney clipped the article and jotted a note on it: "did his wife send him on a junket?"

Shortly afterward, Plame Wilson's name was leaked as a CIA operative, appearing first in a column written by Robert Novak. A federal investigation was launched, and special prosecutor Patrick Fitzgerald interviewed many administration insiders, including Libby, as well as several influential Washington journalists. The investigation focused on whether Plame Wilson's name was leaked as retaliation for her husband's article and to undercut his credibility.

Reached by telephone yesterday, Wilson said he believes Bush's commutation of Libby's sentence raises further suspicion about what role the president, vice president, and other top aides may have had in revealing his wife's identity.

Fitzgerald maintained after Libby's verdict that his false testimony and obstruction may have prevented a case from being brought for the original act of leaking the identity of an undercover intelligence operative.

Bush "has effectively guaranteed that there is no incentive for Mr. Libby to tell the truth about what really happened," Wilson said, adding that his wife "is just as outraged as I am."

Bush's action came at a time when many Democrats and some Republicans have called for a continued investigation into how the president went to war. Some Democrats had hoped the investigation that led to Libby's conviction would unearth fresh information about how the administration manipulated journalists and the Congress with misleading information about the allegation that Iraq had weapons of mass destruction.

Analysts said Bush's decision demonstrated the continuing influence of Cheney, who issued a statement after the sentencing that he was "deeply saddened" by the 30-month term. "Speaking as friends, we hope that our system will return a final result consistent with what we know of this fine man," Cheney and his wife, Lynne, said at the time.

While there has been considerable speculation that Bush would commute Libby's sentence or pardon him, the swiftness of the decision surprised many political observers because it came before Libby exhausted his legal appeals.

"I'm surprised it was this quick. There were other appeals that could have been taken," said University of Richmond School of Law professor Carl Tobias. Tobias noted that the three-judge panel is composed of two Republican appointees and one Democratic appointee, which indicates Libby might have had a tough time winning an appeal. "They were unanimous and these were not what anybody would consider left-wing judges," Tobias said.

During the sentencing hearing, Fitzgerald urged US District Judge Reggie Walton "to make clear and loud that truth matters and one's station in life does not." Walton, in announcing the sentence, said "it is important we expect and demand a lot from people who put themselves in those positions. Mr. Libby failed to meet the bar."