Washington (CNN) -- President Barack Obama's nominee to be the nation's chief spy has been left waiting in the wings while Congress tries to complete work on a new intelligence bill that is being held up by House Speaker Nancy Pelosi.
Senate Intelligence Committee chairwoman Dianne Feinstein said she won't hold confirmation hearings for James Clapper, currently the Defense Department's chief intelligence officer, to become the next director of national intelligence until her top priority is completed -- Congressional passage and the president's signature on the 2010 Intelligence Authorization Bill.
At issue is a provision in the bill that changes the ground rules for how the president notifies Congress about top secret intelligence activities.
The current law allows the executive branch to brief only a small group of congressional leaders known as the "Gang of Eight" about certain top secret intelligence activities. The speaker and minority leader of the House; the majority and minority leader of the Senate and the chairman and vice chairman of the House and Senate Intelligence Committees are briefed on the covert programs, but they are prohibited from both taking notes and discussing the programs with any other lawmakers or staff.
The president determines if an activity warrants calling in the limited Gang of Eight or if the whole of the intelligence committees should be briefed.
During the Bush Administration, the Gang of Eight were the only lawmakers informed about some of the controversial programs undertaken after the 9/11 terrorist attacks, such as the use of domestic wiretaps, CIA interrogations and detentions and "harsh interrogation" techniques like waterboarding.
Once those programs were publicly exposed in the media, many members of congressional oversight committees were outraged that they knew nothing about the programs and accused the administration of hindering them from performing their duties.
Each of the intelligence committees came up with proposals to change the notification provision within the intelligence authorization law, but a White House veto threat prompted the leadership of the committees to come up with a compromise acceptable to the administation.
Congressional aides familiar with the compromise proposal say it requires that all Gang of Eight notifications be in writing and a record be kept by the president of which members of Congress are briefed and the date of the briefing. It also would make the president provide the oversight committees with written procedures for carrying out congressional notifications, including the rationale for why the full intelligence committees are not briefed.
The proposal would also direct intelligence agencies to explain the legal basis for intelligence activities and covert actions, and the heads of intelligence agencies must certify on an annual basis that they are in compliance with congressional notification requirements.
To get White House support, the lawmakers agreed to drop provisions that would have mandated notifying the intelligence committees whenever the Gang of Eight was briefed.
Pelosi, however, is not happy with the deal. Her spokesman, Drew Hammill, said "the speaker is pushing for more congressional notification" but would not say exactly what Pelosi wants in the bill.
A congressional aide familiar with the dispute but not authorized to speak on the record said Pelosi wants all members of the intelligence committees to be informed of any Gang of Eight briefings.
Last year, Pelosi had a dispute with the CIA about whether she had been told during a 2002 briefing for the Gang of Eight that a terrorism detainee had been waterboarded. The CIA said she was informed about the use of the harsh interrogation technique, but Pelosi said she wasn't and accused the CIA of misleading Congress.
The congressional aide said the Democratic leadership of both the House and Senate Intelligence Committees thought Pelosi was in favor of the compromise and were unaware of her concerns about congressional notification.
"It's disappointing that when we are fighting wars on several fronts and facing threats from a variety of enemies, Speaker Pelosi would play politics with the long-needed intelligence bill that has the support of both the White House and Congressional intelligence committees," said Sen. Kit Bond, the ranking Republican on the Intelligence Committee.
Feinstein would not comment directly on Pelosi but stressed the need for a bill. She pointed out that there has not been an Intelligence Authorization bill passed by Congress in five years.
"To continue without a bill puts the committees at risk of becoming paper tigers. Oversight is weakened unless we have the ability to make law based on that oversight," said the senator. She added that congressional notification requirements have been strengthened and have the support of the president.
Despite the delay, Feinstein said she believes the Senate will be able to confirm Clapper as director of national intelligence before the August recess.
"I look forward to the bill passing in the due course of moving on the Clapper nomination," the California Democrat said.
In the meantime, Clapper, nominated by Obama on June 5 to replace Dennis Blair, must wait for an agreement to be reached while Blair's former number two, David Gompert, fills in. But considering that Congress has not passed an authorization bill since 2005, it's probably a good thing Clapper didn't quit his current job.
CNN's Deirdre Walsh contributed to this story