A bill will be presented to congress next week proposing the end of the DAS and outlining the structure of the new intelligence agency, according to the statement.
Munoz said that the majority of the current agency's 6,000 employees would be transferred to the criminal investigative unit of the police and other investigative bodies.
The move could help restart a trade agreement with the US which has been blocked by Democrat congressmen over accusations that local union leaders face persecution in Colombia.
The government of Alvaro Uribe, the Colombian president, has repeatedly denied ordering the controversial phone tapping.
Margaret Sekaggya, UN special rapporteur on human rights defenders, demanded earlier on Friday that the DAS stop its illegal monitoring of activists, which apparently continued even after the scandal emerged.
She said the surveillance has been used to trump up false charges against rights workers, who are sometimes accused by government officials of supporting the rebel Revolutionary Armed Forces of Colombia (Farc).
A number of other former DAS agents are being investigated for allegedly taking bribes to provide paramilitary groups with hit lists.