The American Bar Association voted yesterday to accredit the District of Columbia School of Law, a decision that will allow the school's graduates to take most state bar examinations and will give students access to federal financial aid.

Word of the ABA's decision reached the three-year-old law school in the afternoon, setting off squeals of "We're legal" and "It's official" in the hallways. Students, faculty members and staff members shared congratulatory hugs and kisses.

"I'm relieved and happy, especially for the third-year students," said Art Ermlich, a first-year student. "Things have been a little touchy here."

Associate Dean Shelley Broderick went from office to classroom yesterday afternoon announcing the news she had received by telephone from Dean William Robinson, who was attending the ABA meeting in Seattle.

"This has been a lot of hard work," Broderick said. "Now, I can put on my dancing shoes."

Just a week ago, Mayor Sharon Pratt Dixon proposed to phase out funding for the law school as part of a plan to reduce the city's budget deficit, which is more than $300 million.

The D.C. Council quickly rejected the idea, and all 12 members signed a letter pledging to fully fund the school, which now has a $4 million budget.

Council member Hilda H.M. Mason (Statehood-At Large), chairman of the Council Education Committee and a strong supporter of the school, said the ABA vote "confirms my confidence that the law school is a viable institution."

Vada Manager, Dixon's spokesman, said the news about accredition was "great." But Manager said that Dixon had not "notified me of any change in her proposal."

The accreditation process is a year long. The ABA examines all aspects of a school, including the backgrounds of its faculty and students, the holdings of the school's library and its hours of operation and the school's programs. Members of an ABA accrediting team spend three days at the school. At the end, the school submits a 2,000-page application.

The ABA granted the D.C. School of Law provisional accreditation, the highest level it can achieve after three years of operation. In two years, the school can apply for full accreditation. ABA teams visit and evaluate provisionally accredited schools every year. A fully accredited school is visited every seven years.

The D.C. School of Law was created in 1986 by the D.C. Council, over the objection of Mayor Marion Barry, after the demise of Antioch Law School.

Since the school's inception, it has fought commissions and political leaders who said the city did not need or could not afford a public law school.

The school has countered that its mission -- to educate large numbers of minorities and city residents in public interest law -- made it unique. And it said that the 750 hours each of the school's students work providing legal aid to low-income people help to offset some of the city funds the school gets.