Faced with a growing Republican rebellion, the White House has given up its effort to prevent restrictions on grants awarded by the National Endowment for the Arts and has begun talks with members of Congress on the scope of restrictions it will accept.

White House deputy press secretary Alixe Glen said the White House "is not negotiating" the restrictions but "has opened the door to Congress and said, 'You come up with some reasonable way of handling these problems and we'll be receptive.' But we don't accept shutting down the endowment or letting Congress decide what is art and what isn't."

Until last week, the administration, led by President Bush, had called for a reauthorization of the arts endowment with no restrictions on its authority to award grants. Last week, the White House called for a one-year "cooling off" period on the issue, arguing that a bipartisan commission, not Congress, should recommend any changes in the grant program.

White House officials acknowledged yesterday that the "cooling off" proposal had failed and that Bush and endowment Chairman John Frohnmayer now accept what one official called "the political reality" that restrictions will be part of the arts endowment funding legislation.

The outlines of a possible compromise on the key issue of restrictions on grants began to emerge yesterday as Reps. Pat Williams (D-Mont.) and E. Thomas Coleman (R-Mo.) said they could agree on requiring the endowment to impose penalties on grant recipients if their work leads to a conviction on obscenity charges. Williams and Coleman are members of the House postsecondary education subcommittee that is handling the reauthorization legislation.

A source close to the endowment said such language also would be acceptable to NEA Chairman Frohnmayer.

But Rep. Dana Rohrabacher (R-Calif.) said that the language proposed by Williams and Coleman would not satisfy opponents. "Unless there are standards that would prevent the subsidy of anti-religious and morally reprehensible art, then it's going to be defeated and no agreement between two people who are basically on the same side of the issue is going to make a difference," he said. "A compromise between them means nothing."

Rohrabacher said he has been circulating a draft of restrictive language that he wants to impose on the endowment. It would forbid it to fund art that "depicts or describes in a patently offensive way human sexual or excretory activities or organs . . . that type of thing," Rohrabacher said.

He said his proposal also would deny financial assistance for projects "that denigrate the beliefs, tenets or objects of a particular religion" or that "denigrate an individual or group of individuals on basis of race, sex, handicap or national origin." His language also would prohibit desecration of the flag or child pornography, he said.

A handful of the grants awarded or under consideration have been described by some conservative lawmakers and others as blasphemous or obscene or both, leading to the move in Congress to restrict the endowment's grant-making authority. Under existing law, the National Endowment for the Arts is forbidden to fund work that the arts agency deems "obscene," including such activities as "sadomasochism, homoeroticism {and} the sexual exploitation of children." Several major arts institutions have refused endowment funds because they have been urged to sign pledges of compliance. A lawsuit is pending.

Bush, in his only public comment on the controversy, had argued that existing endowment procedures are sufficient to prevent the award of questionable grants. He signaled his move away from that position during a meeting yesterday with House Republican leaders, according to congressional and White House sources. Officials said House Minority Whip Newt Gingrich (R-Ga.), referring to a list of grants described in the Washington Times, told Bush that taxpayers around the country are concerned that their taxes not pay for "bizarre" art and theater.

"The president made it clear he agrees the government shouldn't fund those kinds of things and the status quo is unacceptable," an administration official said.

The Washington Times article described five theater grants the endowment is moving to kill. All are grants for solo performances that involve nudity, simulated sexual acts or acts such as urinating on stage.

The official said the administration's goal is to have Congress wrestle with the contentious and emotional issues of how to change the endowment's grant procedures and congressional oversight of NEA's use of public funds without further inflaming the arts community, which views the efforts as censorship. The White House official said the administration at the end of last week "got into this heavily in order to get the president out of it."

Administration officials said Vice President Quayle's chief of staff, William Kristol, has held several meetings with key Republican House members involved in the issue. Rep. Paul B. Henry (R-Mich.) and others are working on draft language that White House officials said "will try to define a standard" for projects funded by the endowment. The White House is pushing a "broad standard" that does not narrowly try to define what is or isn't obscene or blasphemous, an official said.

Congressional officials also are working on the structure of the endowment to propose changes in how grants make their way through the review process. One official said, "The question is how much structural reform is necessary and how much can be done administratively. Congress wants to know how does the NEA system work so that these kinds of grants make it all the way through the process and get awarded?"

Gingrich said the meeting at the White House yesterday was a "very spirited discussion about . . . the fact there is considerable concern in the country on a distinction between subsidy and censorship and a real concern about some of the things which have been listed recently as the ways in which taxpayers' money is being spent in terms of some fairly bizarre behavior."

"People do not understand why their tax money would go to pay an artist whose art is urinating on a picture of Jesus," Gingrich said in reference to one of the pending solo performance grants. "This is sort of nonsense in most of America, although it apparently makes some sense in some very limited areas."

An administration official, rejecting the suggestion that Bush had given into conservatives on a censorship issue, said, "No, what he is doing is saving the endowment and seeing that it continues to have funds and saving its chairman."

Two officials, one in the White House and one in Congress, said House Republicans had gotten so frustrated at floods of letters after descriptions of some grants were published that they had inquired whether they should organize a public effort to oust Frohnmayer. The White House official said that Bush "would have none of that."

As the maneuvering continued, Rep. Williams yesterday canceled a scheduled mark-up of a five-year reauthorization of the arts endowment with no restrictions on the types of grants that would be funded. He and Coleman agreed to send the bill directly to the full Education and Labor Committee, which is scheduled to act on the legislation next week.

Williams said the concept of penalizing grant recipients whose work is determined to be obscene "is far, far better than content restrictions based on subject matter. It leaves the determination of obscenity to the courts, where it belongs. . . . It is a far cry from copper-riveted censorship."

The question of the length of the endowment reauthorization was still unresolved. Williams said he favors a three-year reauthorization while Coleman declined to state his preference.

Also up in the air was Coleman's proposal to drastically increase the proportion of endowment grant money that would be distributed by state arts agencies. Currently, the states get 20 percent of the grant money; Coleman and Rep. Steve Gunderson (R-Wis.) proposed increasing that to 60 percent.