The U.S. Education Department threatened yesterday to withhold more than $17 million from Fairfax County schools if the system continues to defy a federal mandate to give reading tests to thousands of immigrant children.

Other Virginia school systems would also be in jeopardy if they refuse to comply with the federal No Child Left Behind Act, and the state could lose $2 million in administrative funds.

The possible loss of millions of dollars raises the stakes in a months-long standoff between the federal government and a growing group of Virginia educators over the best way to test immigrant students learning English.

The dispute started last summer when federal officials rejected the test Virginia uses to measure the progress of many immigrant children. The exam shows how well students learn to read, write and speak English. But it doesn't, as the No Child law requires, test students on their understanding of grade-level reading material, which can include comprehension and such concepts as similes and metaphors.

The Fairfax County School Board passed a resolution last month to defy the mandate, saying it is unfair to give such an exam to students just beginning to grasp the nuances of English. School boards in Arlington County, the city of Fairfax and Harrisonburg passed similar measures. The rebellion appears to be intensifying, with Loudoun County school officials also considering such a step.

"The resolutions say we will do the fair and right thing," said Allen C. Griffith, vice chairman of the Fairfax City School Board. But he said the threat of sanctions means that school systems will have to make difficult decisions.

The Education Department has "got the hammer, and they've got the big stick," Griffith said. "I suppose they can force these districts to bend to their will. . . . But how have the children gained anything?"

Chad Colby, an Education Department spokesman, said that under the No Child law, systems must show that all students, including children learning English, are making academic progress. He said the federal government needs to know that the funds it distributes are being used wisely.

"If you don't assess students, you don't know which students need the most help and how to direct those resources," Colby said. "Prior to No Child Left Behind, we spent . . . and there was no accountability."

The rift in Virginia mirrors a nationwide debate over how to ensure that English-language learners, a fast-growing population in schools, are making progress. When the Education Department rejected Virginia's test, it also found problems with the way 17 other states test English-language learners. Testing programs in Maryland and the District have withstood federal scrutiny.

Federal education officials note that students who are in the country less than a year are exempt from the reading test. Other language learners are allowed accommodations, such as more time or use of a bilingual dictionary.

Virginia educators, who say it takes far longer than a year for most children to comprehend grade-level reading work, had asked for permission to use the old test this spring and develop an alternative for next year. That request was denied.

Of the approximately 10,200 Virginia students affected by the testing dispute, about 4,000 are in Fairfax. Thousands more immigrant students who have made enough progress take the same reading tests as their native-speaking peers.

But in a meeting yesterday with state Superintendent of Public Instruction Billy K. Cannaday Jr., U.S. officials indicated that there probably will be a third alternative for Virginia schools. Federal officials said they expect to approve a state request to use a portfolio of a student's work over time instead of a test.

Fairfax County School Board member Stuart D. Gibson (Hunter Mill) yesterday said he does not think there is enough time to train teachers on the portfolio assessment and to collect assignments that show a student has mastered the material before the spring testing season.

Staff writer Michael Alison Chandler contributed to this report.