International Business Machines Corp., yielding to a growing outcry from employees and government officials, said yesterday that it will allow tens of thousands more of its workers to retain their former pension benefits rather than switching to a new plan the company imposed last spring.

IBM, with 140,000 workers, is the most prominent of hundreds of companies across the nation that have sought to revamp their traditional pension plans in ways that critics charge will hurt older workers. Its well-educated, computer-literate work force managed to bring a new level of attention to the issue, which has been simmering for several years.

Apparently hoping to defuse the controversy, IBM said it will now allow up to 65,000 of its workers who are at least 40 years old and have 10 years with the company to opt for the old plan. Originally, the company had offered the option only to workers within five years of retirement.

The change roughly doubles the number of workers allowed to choose between the old and new plans. Younger workers must go into the new plan.

"IBM has read the handwriting on the wall. . . . This is a significant step forward," said Rep. Bernard Sanders (I-Vt.), who has been pressing the Internal Revenue Service, Labor Department and Equal Employment Opportunity Commission to investigate whether the new plan, and others like it, discriminate against older workers.

IBM spokesman John Bukovinsky said, "The sole reason [for the change] was the response of our employees, and in particular employees who had been with the company long enough to have made some serious financial plans predicated on the previous pension plan. We received some very heartfelt messages. . . . We were in a position to fix it, and we did."

At issue is what is called a "cash-balance" pension, which is growing in popularity with employers but can result in reduced benefits for older workers.

In a traditional pension plan, workers accrue most of their pension benefits during their final working years. Such plans tend to reward long-time employees, but are less beneficial to workers who change jobs often.

In a cash-balance plan, benefits accrue more evenly, so younger workers build benefits more rapidly. If they change jobs after working a short time, they have accumulated a larger benefit than would be the case in a traditional plan.

IBM said it was making the shift to reallocate resources to salaries and stock options, which it believes make the company more attractive to skilled workers in a very competitive employment market.

While cash-balance plans can be designed to provide the same overall benefit level as a traditional plan, some companies have been accused of using them to cut benefits in a way that is hard for workers to discern.

Also, conversions to cash-balance plans create a risk that older workers, who accrued benefits slowly under the old plan but expected accruals to accelerate in later years, will be left with the worst of both worlds. In other cases, workers who already have larger benefits than the new plan calls for at this stage of their careers may end up working for a number of years while gaining no new pension credit. Thus, critics see cash-balance plans as discriminating against older workers.

The issue is beginning to attract notice among regulators. The IRS this week instructed field offices to cease granting approval for conversion of traditional pension to cash-balance plans and instead to consult with the national IRS office before granting such permission.

Because pensions get substantial tax breaks, the IRS is a key regulator, and the change was taken as an acknowledgment that cash-balance plans may present discrimination issues.

EEOC Chairwoman Ida L. Castro has also announced that her agency will undertake an investigation of cash-balance plans.

If the IBM part in the controversy fades, pressure on the agencies may subside. But Sanders said he and other House members will push ahead with legislation to "make it impossible for any company to do what IBM has done."

He said he believes that in a conversion all workers should be able, to choose which plan to participate in. He added that his office has already received hundreds of calls from IBM workers under age 40 complaining that they are being denied that choice.