The Bush administration said yesterday it will begin efforts to deny federal contracts and more than 300 federal benefits and grants -- including student financial aid, small business loans, pilots licenses and artistic grants -- to anybody convicted of possessing or trafficking in drugs.

In announcing the program, which was mandated under the 1988 Anti-Drug Abuse Act, national drug policy director William J. Bennett called the denial of federal benefits "an additional and potentially powerful deterrent to drug crime" that would pose its greatest threat to middle-class or white-collar professionals caught using drugs.

But Rep. Charles B. Rangel (D-N.Y.), chairman of the House Select Committee on Narcotics, denounced it as "more slogans and catch-phrases." He also charged that the administration had provided virtually no aid to state governments to implement similar programs where they could have real impact by denying such benefits as driver's licenses.

Even Bennett acknowledged that major drug traffickers are not likely to be deterred by the threat of losing such federal benefits as nuclear power plant licenses, national wool payments or federal ship construction subsidies.

But even the program's impact on smaller dealers or users could well be minimal in part because of limitations that Congress wrote into the law. All "social safety net" programs are exempt, including Social Security and retirement payments, welfare, health, disability, veterans and public housing programs.

And denial of federal benefits are not automatic. Assistant Attorney General Jimmy Gurule, charged with overseeing the program, said yesterday that federal prosecutors this week will begin asking judges to include the revocation or future denial of licenses as part of their sentencing of drug defendants. But the final decision will rest at the discretion of the courts, he said.

Nevertheless, Gurule said the program was introducing an alternative form of punishment that could gain wide acceptance for certain kinds of defendants.

"We must . . . recognize that most offenders never serve a prison term, and, simple probation is often not sufficient," Gurule said. "We need intermediate steps, intermediate punishments."

He noted that the denial of federal benefits -- along with civil penalties, military-style boot camps, house arrests and other innovative programs being tried by the Justice Department -- fit into that category.

According to the 1988 law and regulations published in the Federal Register yesterday, persons convicted of a drug trafficking offense could lose federal benefits for up to five years on the first offense and up to 10 years on the second offense. A third trafficking conviction automatically results in permanent denial of benefits. Persons convicted of any drug possession case, however, would only lose federal benefits for up to one year for the first offense and up to five years for the second offense. But the benefits can be restored if an offender shows the court that he has been "rehabilitated," defined as abstention from drug use for six consecutive months under a separate proposed rule published in the Federal Register yesterday.