Washington, Feb. 6--Senate negotiators have reached agreement on President Bush's signature legislation to boost charities, congressional officials said, likely resolving an issue that has bedeviled the administration for the past year as it sought ways to help religious organizations provide social services.

President Bush has scheduled a formal announcement for Thursday to voice his support for the legislation, which his aides helped to draft with Sens. Joseph Lieberman, D-Conn., and Rick Santorum, R- Pa., their parties leaders on the subject.

In talks with the senators, the White House jettisoned the controversial elements of the legislation, provisions that would have made it easier for religious groups to compete for government grants without compromising their beliefs. A coalition of civil libertarians and religious conservatives argued that such provisions would cause an unconstitutional blending of church and state.

The package that has emerged includes mostly financial provisions to increase both public and private support for non-profit groups that seek to aid the poor and disadvantaged through shelters, drug treatment, and other programs. It allows a charitable tax deduction for those who do not itemize on their tax returns, a "Compassionate Capital Fund" to encourage public-private partnerships, and the restoration of funding to the Social Services block grant, a pool of federal money for community organizations. "We are pleased with the progress being made in the Senate on key elements of the president's Armies of Compassion agenda," White House spokesman Scott McClellan said Tuesday night.

Even with the White House's blessing, the Senate agreement faces one final hurdle: negotiation with the House, which passed a measure including the "charitable choice" provisions that raised issues of separation between church and state. Liberals objected to the proposals because they could allow religious charities to discriminate against gays in hiring, while conservatives worried government interference could compromise religious charities spiritual mission.

Senate officials warned that Democrats would reject any effort to restore the provisions they consider objectionable in a conference with the House.

The compromise on the "faith-based" legislation is an important accomplishment for Bush as he seeks to post some legislative victories on domestic matters before election year politics prevent further progress. He recently signed the bipartisan accord on education reform, and the White House has been talking with Sen. Edward Kennedy, D-Mass., about an HMO patients rights measure. White House and Senate officials declined to provide the exact cost of the legislation.

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