A revised US policy on American hostages taken overseas opens the way for families to pay ransom, President Barack Obama said Wednesday.
The White House's policy of "no concession" to designated terror groups came under fire after several US hostages were beheaded by Daesh last year.
Federal law prohibits the government and families from paying ransom.
But speaking at a White House press conference Obama said the new presidential directive will make three significant changes to the policy.
The US will not pay ransom or any material to terror groups but the administration will be allowed to communicate with hostage takers.
Obama said the Justice Department would not prosecute families who intend to pay ransom for the return of their loved ones.
"I firmly believe that the United States government paying ransom to terrorists risks endangering more Americans and funding the very terrorism that we're trying to stop," Obama said, but he added that the government may assist families in communications with hostage takers, "to ensure the safety of the family members and to make sure that they're not defrauded".
The administration will also establish a central hub with a two-point approach to dealing with hostage issues.
The Hostage Recovery Fusion Cell will work through a hostage response group and a family engagement team that will facilitate better communication with families and coordinate interagency efforts to return hostages.
There will also be a new special presidential envoy for hostage affairs who will coordinate engagements with foreign governments on hostage issues.
Obama conceded that the administration has let down the families of hostages by failing to communicate with hostage takers or paying ransom to help secure the return of their family members, but said the families of recently beheaded Americans contributed to forming the new policy. "In fact, many of the changes we're announcing today are a direct result of their recommendations."
Since 9/11, Obama said, more than 80 Americans have been taken captive while just half of them have returned home.
