Published: May 07, 2010 5:05 PM EDT

 WASHINGTON - Americans working for foreign terrorist organizations and lone wolf terrorists could lose their citizenship under bipartisan legislation introduced Thursday in both houses of Congress.

The proposal is a reaction to Times Square bomb suspect Faisal Shahzad, a native of Pakistan who became a U.S. citizen a year ago. House Speaker Nancy Pelosi, D-Calif., said the proposal "sounds like a good idea," but the State Department urged that legislation only apply to those convicted of crimes.

U.S. law identifies seven categories of acts that could result in loss of citizenship. They include serving in the armed forces of a foreign state at war with the United States, renouncing nationality when the United States is at war, and treason.

Sponsors said the law needs to be updated to combat terrorism. The bill would expand the revocation law to anyone who provides material support or resources to a foreign terrorist organization, as designated by the secretary of state. It also would apply to anyone who engages in, or supports, hostilities against the U.S. or its allies.

As in current law, the State Department would make a determination that an individual has lost his or her U.S. nationality. The target of the action could seek a State Department review and also challenge the decision in U.S. district court.

"I like the spirit of it," Pelosi told reporters. State Department spokesman P.J. Crowley said he was not aware of the details, but he said any new law should have restrictions.

"It's important ... that we make sure that any action, any legislation that Congress might consider would make sure that we have due process, that we are talking about people who are actually convicted of crimes as opposed to people who are just suspected of crimes," Crowley told reporters.

"I think the American people would be concerned if you took prospective actions, certainly one as serious as revoking citizenship, just for someone who is suspected of committing crimes." Sponsors of the bill are Sens. Joe Lieberman, I-Conn., and Scott Brown, R-Mass., and Reps. Jason Altmire, D-Pa., and Charlie Dent, R-Pa.