President Obama selected Dr. Varmus, who is now president of Memorial Sloan-Kettering Cancer Center in New York, after a lengthy search.

 Dr. Varmus is expected to shake up the much-criticized federal cancer program. In a recent report, the National Academy of Sciences said the nation’s most important system for judging the clinical effectiveness of cancer treatments — managed by the cancer institute — was approaching “a state of crisis.”

 The director of the cancer institute is appointed by the president, but Senate confirmation is not required. The current director of the cancer institute, Dr. John E. Niederhuber, was appointed in 2006 by President George W. Bush.

 Dr. Varmus’s return to Washington is unusual because he once led the agency of which the cancer institute is part. From 1993 to 1999, under President Bill Clinton, Dr. Varmus was director of the health institutes.

The cancer institute has a budget of $5.1 billion this year. The budget of the N.I.H. over all is $31.2 billion.

Under Mr. Obama, Dr. Varmus has been co-chairman of the President’s Council of Advisers on Science and Technology. The current N.I.H. director, Dr. Francis S. Collins, is a friend of Dr. Varmus and recommended him for the new job.

 “There are tremendous new opportunities in cancer research, with knowledge about the human genome and how cells are wired,” Dr. Varmus said in an interview. “Everyone feels a sense of accelerating success. There are amazing prospects.”

 In the past, Dr. Varmus’s relations with advocacy groups for cancer patients and cancer research were sometimes strained.

 But Dr. Otis W. Brawley, the chief medical officer of the American Cancer Society, said he was “thrilled and delighted” by the selection of Dr. Varmus.

 Dr. Varmus, who is 70, was awarded the Nobel Prize in 1989 for studies showing how certain normal genes could cause cancer when they went awry, pathbreaking work that opened a new era in cancer research.

 Ellen V. Sigal, chairwoman of Friends of Cancer Research, a public education group, said: “Dr. Varmus’s experience at Memorial Sloan-Kettering has given him a perspective he did not get running a laboratory or N.I.H. He appreciates how important it is to use basic research to meet the needs of patients.”

 But Frances M. Visco, president of the National Breast Cancer Coalition, said she had questions about how Dr. Varmus would work with advocacy groups like hers.

 “Dr. Varmus is known for his genetic research,” Ms. Visco said. “He’s a lab scientist. There have been many promises about such research. We need leadership that will move it into the clinic so this research will make a difference to people.”

 In a memoir published last year (“The Art and Politics of Science,” Norton), Dr. Varmus recalled a confrontation he had in 1997 with Vice President Al Gore, who was demanding that the budget of the cancer institute grow at twice the rate allowed for the N.I.H. as a whole.

 “I was very unhappy about this,” Dr. Varmus wrote. “The differential rates of growth were not in accord with clearly defined medical needs or with carefully considered scientific opportunities.”

 Advocacy groups for specific diseases are among the “strongest supporters” of the N.I.H., Dr. Varmus said, but they often ignore the fact that money for their disease may be taken from promising research in other areas.

 Creation of the cancer institute was authorized by a law signed in 1937 by President Franklin D. Roosevelt. It has supported the research efforts of at least 20 Nobel laureates, including Dr. Varmus, who did much of his research at the University of California, San Francisco.

 Dr. Varmus, the son of a physician, obtained a graduate degree in English from Harvard before attending medical school at Columbia University. When he starts his new job in July, he said, he will ride to work, as usual, on his bicycle.