The Senate formally endorsed Coats, a moderate Republican who represented Indiana in the body until the beginning of January, by a vote of 85 to 12.
The White House has struggled to build a team for national security and military policy. Trump's first choice for his essential national security advisor, Mike Flynn, was forced to resign after allegedly misrepresenting the content of December phone calls with the Russian ambassador.
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As director of national intelligence, he will be in charge of coordinating 17 bodies in the national security sphere, including the Central Intelligence Agency, the National Security Agency, the Defense intelligence agency and the Federal Bureau of Investigation.
Coats, 73, served as a Republican senator from Indiana from 1989 to 1999, and then from 2011 to the end of his term on January 3.
He was US ambassador to Germany from 2001 to 2005 under the George W. Bush administration.
He was one of six US legislators and three White House aides blacklisted by Moscow in 2014 in reprisal for US sanctions placed on the country for its seizure of the Crimean Peninsula from Ukraine.
A strong advocate for sanctions against Moscow, Coats called the ban an honor.
But in his confirmation hearing at the Senate intelligence committee on February 28, his former colleagues warned he might be "too nice" for a job in a White House where some cabinet officials are already at odds with Trump advisors over policies and staffing.
"You're one of the most likeable, affable easy-going people I've met," said Senator Angus King.
"I'm not sure likability and affability are the qualities I want in this position," he said.
"You're going to be reporting to a president who may or may not want to hear what you have to say.
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