The White House budget director told Congress last night that President Clinton would sign the District's fiscal 2000 budget if lawmakers strip it from another spending bill that the president opposes.

Trying to break an impasse over the city's $4.7 billion spending plan, Office of Management and Budget Director Jacob "Jack" Lew said Congress in recent days "has produced acceptable District of Columbia funding legislation, which should be passed on its own merits."

Instead, GOP leaders merged a labor, health and human services and education spending bill with the D.C. bill. Clinton has said he will veto the expanded bill because, among other things, it doesn't provide enough money for teachers and would cut federal spending by 1 percent across the board.

In a letter, Lew told lawmakers they could send the president a free-standing bill or attach the D.C. budget to a bill that Clinton supports.

Rep. Ernest J. Istook Jr. (R-Okla.), chairman of House Appropriations subcommittee on the District, said last night that House Republicans still object to the D.C. budget bill because it allows private clinics that receive federal funds--such as the Whitman-Walker Clinic--to distribute needles to drug addicts in an effort to curb the spread of HIV.

Without the labor bill attached, Istook said, the D.C. budget wouldn't have passed the House by itself "because strong bipartisan feelings remain that government should not involve itself with any group that gives away free needles for injecting illegal drugs."

Sen. Kay Bailey Hutchison (R-Tex.), chairman of the Senate Appropriations subcommittee on the District, who supports private clinics' right to distribute needles, could not be reached.

Clinton vetoed the D.C. bill Sept. 28 because it contained several so-called social riders that he said violated the city's right to govern itself. Among the riders were bans on needle exchanges and the use of marijuana for medical reasons. The president's veto was characterized by Republicans as support for drug abuse.

But since then, Republicans and Democrats have worked out compromises on many of the riders. Progress also was made on the District's participation in lawsuits seeking voting rights for the city.

The ban on the medical use of marijuana would remain, however.

Lew said the modifications to previous versions of the bill were sufficient to win White House support.