South Korea plans to break up its coastguard in the wake of the ferry disaster in which more than 300 people died, says President Park Geun-hye.
In a televised address, Park apologised formally for the sinking.
A new safety agency would handle rescue duties, with investigative functions passing to the police, she said.
The Sewol ferry disaster on 16 April killed 281 passengers, most of whom were high school students. Another 23 are still missing.
"The ultimate responsibility of the poor response to this accident lies with me," Park said.
She said the coastguard had "failed to fulfill its original duties" and "had it actively carried out rescue efforts immediately after the accident", more lives could have been saved.
Park added that in its current form, the coastguard would be unable to prevent another large-scale disaster.
"The coastguard continued to get bigger in size but did not have enough personnel and budget allocated for maritime safety, and training for rescue was very much insufficient," she said, according to Reuters.
Park's office told agencies that her plans had to be approved by the National Assembly, in which her Saenuri party maintains a majority.
South Korea's President Park Geun-hye cries as she delivers a speech to the nation at the Presidential Blue House in Seoul, 19 May.
A relative of missing passengers onboard sunken ferry Sewol watches a broadcast of South Korea's President Park Geun-hye speech to the nation, at a makeshift accommodation at a gymnasium in Jindo, 19 May.
The planned disbanding of the coastguard one of several reforms the South Korean leader announced on Monday.
An interim investigation found that the ferry was overloaded, carrying three times its approved amount of cargo, and that a sharp turn destabilised it and caused it to capsize.
The ferry captain and three members of the crew have been charged with manslaughter. Prosecutors have indicted another 11 crew members for negligence, for failing to evacuate passengers.
Officials from the ferry's operator and a company that conducted safety checks on the ferry prior to the incident have also been arrested.
"This accident showed how big a calamity can be brought about by the abnormal practice of collusion between the government and civilians," Park was quoted as saying by Yonhap news agency.
She said she planned to increase restrictions on government officials taking up jobs related to their duties after retirement. The practice, also known as "bureaucratic mafia" in South Korea, is seen as fostering too-cosy ties between bureaucrats and regulators.
The president also proposed establishing a committee to look into whether the Sewol ferry accident was caused by corruption and other irregularities.
Only 172 passengers survived the sinking of the ferry, including 22 of the 29 crew members.