The Bush administration said yesterday it opposed extension of the government's terrorism insurance program "in its current form," but indicated it could accept a more restricted, clearly temporary measure that would encourage development of private coverage.

The administration's position was outlined in a letter from Treasury Secretary John W. Snow to House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) accompanying a report on the performance of the existing program. It came as something of a relief to the insurance industry.

The current program, known as TRIA after the Terrorism Risk Insurance Act of 2002, provides a federal backup for commercial insurance such as business property damage and workers' compensation. It has drawn criticism as corporate welfare -- the government coverage is free to participating insurers beyond a deductible -- and insurers and real estate developers worried that the administration might oppose its extension in any form. Some interest groups that support the program said they regarded Snow's letter as an acknowledgment by the administration that there was a role for the federal government in insuring against terrorist damage.

"While the Treasury Department clearly . . . does not want TRIA extended, it does leave open some kind of federal backstop," said Leigh Ann Pusey of the American Insurance Association.

Some consumer advocates who oppose the program were heartened by the study's findings.

It "agrees with what we've been saying -- [TRIA] is too generous to a very rich insurance industry," said J. Robert Hunter of the Consumer Federation of America.

But other business groups argued that if insurance dried up, there would be economic damage.

"This risk is so unique it has been very difficult for the insurance industry" to gauge, said Martin L. DePoy of the National Association of Real Estate Investment Trusts, speaking for an umbrella group called the Coalition to Insure Against Terrorism.

TRIA was enacted as a three-year program and is scheduled to expire at the end of this year. In the event of an attack by foreign terrorists, TRIA allows insurance companies to pay a deductible related to their premium income, after which the federal government would pay 90 percent of the damages, up to $100 billion.

The Treasury report "finds that TRIA has achieved its goals of supporting the industry during a transitional period and stabilizing the private insurance market" following the Sept. 11, 2001, attacks, Snow wrote, but "the economy is more robust today than when TRIA was enacted."

"It is our view that continuation of the program in its current form is likely to hinder the further development of the insurance market by crowding out innovation," the secretary said in the letter.