Rep. James P. Moran Jr. (D-Va.) lived for two years in an Arlington condominium rented from a Virginia lobbyist who had business before a House committee on which Moran serves, an arrangement that drew criticism yesterday from a potential Moran challenger and from public interest groups.

From September 1999 to August 2001, Moran paid $1,200 a month to rent a townhouse from Robert B. Nealon, a partner in an Alexandria law firm with Moran's brother, state Del. Brian J. Moran (D). Nealon registered in February 1999 to represent International Technology Resources Inc., a consulting firm that was seeking to influence House Appropriations Committee action on the Next Generation Internet, a White House technology initiative. Moran's defense subcommittee subsequently approved $36 million with his support.

Nealon later helped form a political action committee that contributed $4,000 to Moran's 2002 campaign -- the biggest donation made by the PAC. The committee, the Nuclear Bio Chem PAC, was financed mainly by two employees of another Nealon client, Alexandria-based CRE Inc., a small technology firm specializing in biological weapon detection.

Yesterday, Moran's campaign returned $2,000 of the money to the PAC because it gave him more than permitted by the Federal Election Commission.

In a recent statement, Moran said he did no official favors for Nealon and received no special treatment. "My relationship with Bob Nealon was completely professional and appropriate," Moran said of the lease, which was first reported by the Capitol Hill newspaper Roll Call.

Nealon, a corporate lawyer who occasionally lobbies in Congress, said in a statement that Moran leased the townhouse in as-is condition at a fair-market rent that was $100 more than his previous tenants paid.

"Mr. Moran was a good tenant. He paid the rent on time and sometimes early," Nealon said.

Connections between Moran's personal finances and public life as a congressman have drawn criticism before.

"These people are trying to influence the way you vote, the way you make policy. Can't you rent from somebody else? The rest of us do," said Matt Keller, a spokesman for Common Cause, a public interest group. "These kind of activities reinforce the perception that Congress and special interests are all in bed with each other."

In January 1998, Moran averted bankruptcy through a $447,500 mortgage refinancing loan granted on favorable terms by credit card giant MBNA Inc., as he stepped up support for legislation sought by MBNA executives to restrict consumer access to bankruptcy protection. In 1999, Moran borrowed $25,000 at below-market interest from lobbyist and friend Terry Lierman. Five days later, Moran signed onto a bill to extend a lucrative drug patent for Schering-Plough Corp., a client of Lierman's.

The House ethics panel declined, without comment, to investigate both loans, and the Justice Department dropped a probe of the Lierman matter. Moran said there was no connection between the loans and his work. House ethics rules generally prohibit lawmakers from accepting gifts, loans or services on terms that are not commercially available to the public.

In his statement, Moran criticized news organizations. "These constant attempts by the press to raise unfounded allegations about my relationships with various individuals, which are later rejected by the pertinent authority, need to come to an end," Moran said.

Virginia state Sen. Leslie L. Byrne (D-Fairfax), who is considering a primary challenge to Moran next year, said: "It's that ethically challenged side of Jim that we continue to see. . . . Anybody would look at taking a lease from a lobbyist as a conflict of interest, regardless of the financial aspects . . . and PAC money that went along with it and the same lobbyist coming before your committee."

Two other Democrats weighing bids against Moran, Fairfax County Board of Supervisors Chairman Katherine K. Hanley and Washington lawyer Jeremy Bash, a former Al Gore campaign aide, declined to comment.

The potential challengers emerged this month after Moran was criticized by leaders in both parties for suggesting that American Jewish leaders were pushing the United States toward war with Iraq. Moran apologized for the comments, and he gave up a position in the House Democratic leadership as a result of the controversy.

Staff researchers Mary Lou White and Madonna Lebling contributed to this report.

Rep. Moran said his dealings with the lobbyist were "completely professional and appropriate."