U.S. negotiations with Peru over a proposed $37.5 million military aid package to fight drug trafficking have collapsed and the Bush administration is asking Congress to transfer the aid to other Latin countries, administration sources said yesterday.

Bush administration officials, who asked not to be identified by name, accused the new Peruvian government of President Alberto Fujimori of bad faith and charged that it had reneged on previous agreements made with U.S. officials. They said most of the military aid now slated to go to Peru will be offered to Colombia.

"The United States is going to seriously reexamine its relations with Peru with respect to drugs," said one administration official.

Officials at the Peruvian Embassy in Washington could not be reached for comment.

The U.S. officials said the Peruvian government's refusal to accept the money raises "serious concerns" about corruption within the Peruvian military by drug traffickers opposed to the U.S. program.

The developments this week deal a major blow to the administration's so-called Andean anti-drug strategy -- a plan that was unveiled by President Bush during a nationally televised speech one year ago and endorsed by the governments of Peru, Colombia and Bolivia during a four-nation summit meeting at Cartagena, Colombia, in February.

The strategy called for sharply expanded aid to the three Andean nations -- including large infusions for the militaries of all three countries -- to encourage them to increase their efforts against the drug trade.

Administration officials said from the start that Peru was the centerpiece of the strategy because the country is the world's largest producer of coca plants used to make cocaine. U.S. officials estimate that Peru grows enough coca to supply more than half of the cocaine that enters the U.S. market each year. Most of that is produced in a region known as the Upper Huallaga Valley that is effectively controlled by far-leftist guerrillas.

But Peruvian and other Latin officials have complained that too much of the Andean plan was slated for military purposes instead of development aid that could offer peasants an alternative to growing coca.

Two weeks ago, Fujimori announced that his government did not plan to sign it, calling the package "inconvenient for our interests." U.S. officials held out continued hope that they could accommodate Peruvian concerns and that Fujimori would change his mind.

But yesterday, officials acknowledged that hope had evaporated and there would be no military agreement. In expectation of that development, the administration asked Congress a few days ago to "reprogram" the $37.5 million to Colombia and Bolivia. Similarly, Peru is not to receive another $67.5 million in military aid that had been proposed for the next fiscal year.