Sister Agnes Mary Mansour, forced by the Vatican to choose between church and state in a dispute over Medicaid abortions, yesterday announced that she has quit the Roman Catholic Religious Sisters of Mercy to keep her job as Michigan welfare director.

Her announcement capped nearly three months of controversy that began when the Most Rev. Edmund Szoka, archbishop of Detroit, told Mansour, 52, to resign her job for failing to denounce Medicaid funding for abortions.

Mansour stressed her ultimate obedience to the pope. But she said a commitment to the state's needy and deep concerns over church-state entanglements were the basis for her decision. Mansour said she believes abortion is wrong but should be funded as long as it is legal.

"In my heart, I'm still a nun," Mansour said at a news conference. She said she will remain a devout Catholic, but criticized the church hierarchy for forcing her decision.

"We're certainly disappointed--I think saddened is probably a better word," said Sister Helen Marie Burns, provincial administrator in charge of Mansour's Detroit religious order. "We have known our moments of anger."

The order said it will welcome Mansour back after her government job ends, and criticized the church's male hierarchy for lack of "mutuality" in forcing the resignation.

Sister Maureen Mulcrone said, "When you have a situation in which all men are making the decisions and all women are being decided upon, it's hard to say there is that mutuality." Under canon law, she said, the order needs Vatican permission to reinstate Mansour.