In a city where the "highly placed source" has become a depended-upon institution, Newsweek's decision this week to name a confidential source -- Lt. Col. Oliver North -- has raised troubling questions among the people who report the news and the people they rely upon for information. But the reporter and editor behind the revelation say North's testimony last week, in which he blamed Congress for leaking information on the same story, changed the rules of the sourcing game.

On his final day of testimony before the Iran-contra committees last week, North claimed that following the 1985 U.S. interception of an Egyptian plane carrying the suspected hijackers of the Achille Lauro, "a number of members of Congress" leaked details of the operation "that very seriously compromised our intelligence activities."

Monday's Newsweek offered this addendum: "But the colonel did not mention that details of the interception, first published in a Newsweek cover story, were leaked by none other than North himself."

"I was rather amazed that a news organization would reveal their sources," David Holliday, press spokesman for the Senate Intelligence Committee, said yesterday. "When I was in the news business some years ago, you always operated on the assumption that you don't reveal your sources, and that to do so -- even if it satisfies a momentary need, or what you feel is a need -- has a chilling effect on other sources."

Newsweek Editor in Chief Richard M. Smith said the decision to identify North as a source "certainly took some thought. But North raised the issue himself, in the most public way -- national television, congressional hearings. We did not reveal anything that Colonel North told to us. We simply said that he had been a source on a story. It is the most open secret in Washington that Ollie North was a major source on the Achille Lauro story and a whole range of other U.S. policy stories. Why should our readers be left in the dark about North's relationship with the press?"

Smith called the circumstances that prompted Newsweek's story "an unusual situation ... We were certainly not revealing any secret that these other journalists don't know. Again, North raised the question of leaks on that story and I don't think any other confidential sources need to feel the least bit concerned whatsoever."

Newsweek media reporter Jonathan Alter suggested this week's article to Smith and wrote it, following up on a story he wrote this January headlined "When Sources Get Immunity: Was North Pampered?" Alter said yesterday that in his January piece he suggested "that sometimes a source relationship is not the paramount value. It's an extremely important value but it does not always outweigh all other values ..."

Alter's January article said, "Many reporters and editors, including Newsweek's, suspected that North was involved deeply in the contra-supply network at a time when Congress had barred government aid to the contras. Why didn't they pursue that story more aggressively?"

The answer, he argued, had a lot to do with reporters' need to stay on good terms with sources. "I posited the theory that perhaps one of the reasons this did not come out earlier," Alter said yesterday, referring to the entire Iran-contra story, "was that so many reporters used North as a source, and it becomes difficult when a source becomes the subject of a story ... Sometimes you have to blow a source, and if some reporters had been willing to blow a source earlier, this whole thing might have come out earlier."

So when North himself broached the question of sources and leaks, and blamed Congress, Alter felt it was time for another story.

"It might make people a little uneasy, but I guess that's part of my job, to make my colleagues uneasy," said Alter. "As long as it's a judicious way of making them uneasy, that doesn't cause any problems ... I really hope that people don't lose sight of the larger point, which is that this took some chutzpah on North's part ... I think the real emphasis on this should be on North rather than on Newsweek."

North made his charges after he was asked to supply two examples of leaks to support his stated reason for lying to Congress: that he did not trust members to keep sensitive information secret. In his first example, he alleged that last year two members of Congress emerged from a White House briefing and, through the press, provided Libya with warning of the upcoming American bombing. Senate Iran-contra Committee Chairman Daniel Inouye (D-Hawaii) strongly disputed North's claim, noting that administration officials had been quoted earlier in the week hinting that an attack was imminent. (In fact, the two congressional leaders -- Sens. Robert Byrd (D-W. Va.) and Claiborne Pell (D-R.I.) -- said next to nothing about their presidential briefing; Pell said only that the president would be making an announcement that evening.)

North's other example was the Achille Lauro incident.

Brookings Fellow Stephen Hess, who has written extensively on the press and what he calls "the typology of leaks," said yesterday that Newsweek's decision touches on a complicated issue that "will be debated in journalism reviews for a while. Reporters have done everything, including go to jail, to protect a source ... one does it not only because one keeps one's word, but because this thing has a boomerang effect. It's apt to come back."