Senate leaders expressed growing confidence yesterday that the new bipartisan budget agreement will be approved by the Senate as the Bush administration moved to quell a mounting rebellion among House Republicans that could endanger final passage of the pact.

"We feel very optimistic," said Senate Minority Leader Robert J. Dole (R-Kan.). "It won't be easy but the alternatives are so grim I think it will be approved," said Senate Majority Whip Alan Cranston (D-Calif.).

Their comments followed party caucuses in which most senators reportedly indicated they could reluctantly support the tax increases and spending cuts endorsed Sunday by President Bush and congressional leaders as part of the largest deficit-reduction plan ever proposed.

"It's like drinking a gallon of castor oil, but we're going to do it," said Sen. John W. Warner (R-Va.).

But prospects for the five-year, $500 billion deficit-reduction plan were far less clear in the House, where Minority Whip Newt Ging- rich (R-Ga.) and four other GOP leaders denounced the pact after an hour-long Republican caucus attended by Vice President Quayle and other top administration officials as part of the administration's lobbying effort.

"It is my conclusion it will kill jobs, weaken the economy and that the tax increase will be counterproductive and that it is not a package that I can support," said Gingrich. "We need to do better than this."

The budget agreement includes a politically painful combination of spending cuts in popular domestic programs, increased health care costs for the elderly in the Medicare program, higher excise taxes on cigarettes, liquor and wine, and a 12-cent hike in federal gasoline taxes that will affect virtually every American.

Financial markets gave the budget agreement a generally warm welcome. The Dow Jones industrial average, which also was buoyed by a slide in oil prices, rose 63.36 points to close at 2515.84.

Denunciation of the agreement by Gingrich and Reps. Vin Weber (Minn.), Bill McCollum (Fla.), Duncan Hunter (Calif.) and Robert S. Walker (Pa.), all members of the House GOP leadership, underscored expectations that the House will be the main battleground in the fight over approval of the pact.

House Republicans appear to be more hostile to the plan than Senate Republicans in part because all of them face the voters next month and many feel that Bush's reversal on his promise not to increase taxes has exposed them politically.

The first test for the plan will come as early as Wednesday when the House may take up a budget resolution incorporating the deal that was cut by the president and leaders of both parties in Congress after lengthy negotiations. Other equally critical votes will follow to implement the plan before Congress adjourns later this month.

Democrats have demanded that a majority of Republicans in both houses vote for the budget plan as the price for their support, meaning the package may be doomed if Bush and Minority Leader Robert H. Michel (R-Ill.) cannot produce at least 89 GOP votes for it in the House.

However, even some of the House Republican leaders who oppose the budget plan indicated they thought Bush may be able to get at least half of the House Republicans to support him. "I do not underestimate the ability of the White House to get a majority based on appeals to loyalty," said Weber.

To accomplish this, the White House dispatched Chief of Staff John H. Sununu, Treasury Secretary Nicholas F. Brady and Office of Management and Budget Director Richard G. Darman to meet with Republicans in both houses. The three senior administration officials were joined by Quayle in courting conservative Republicans in the House.

The group, including Quayle, also met separately with at least two groups of House Republicans at the White House, and Cabinet members were phoning wavering lawmakers. Bush is expected to participate in similar meetings at the White House today.

But White House officials expressed misgivings about the idea of a nationally televised speech by the president to build public support for the budget plan, which some Democrats have been urging as a key element in bringing pressure on Congress to approve the plan. They said timing was a problem and indicated reluctance to risk the president's political capital when the outcome is uncertain.

In remarks at a ceremony in New York to sign the stopgap spending bill approved by Congress Sunday, Bush used what aides said would be his major sell-the-budget theme. "This is a time for leadership," he said. "We must put aside partisanship for the sake of our nation. We must act now to solve this budget problem."

Bush also said the pact should result in lower interest rates. "I would look to the Federal Reserve to lower the rates," he said. "I hope they would once they see that a sound budget agreement has been put into effect."

The president acknowledged that he may come under attack for dropping his campaign pledge against tax increases and for giving up his quest for a cut in the capital gains tax rate. "I'm not interested in talking about that," he said. "Fine. Take the heat. Take the hit. There have been changed times. It didn't work out the way I want. I don't have the horses in the Congress to do it exactly my way. So you have to govern. You have to lead."

Democratic leaders in the House and Senate met yesterday with Democratic lawmakers who have problems with the package, including conservatives and members of the black caucus.

But Democratic aides insisted that the primary burden for passing the agreement into law rests with Bush and his ability to win over dissidents in his own party. Some Democrats privately expressed the hope that Republican defections will kill the plan so they don't have to. "Let them screw it up," said one member.

"I expect that we are going to get 50 percent plus one in each party," said House Speaker Thomas S. Foley (D-Wash.).

But others appeared less certain. The office of one House member from the Southwest reported receiving 50 phone calls on the issue yesterday, with 49 of them opposed to the plan. "I don't sense any enthusiasm. How do you pass this thing? The middle is not that big," said another lawmaker, Rep. Michael A. Andrews (D-Tex.), in reference to opposition to the pact from the political extremes within the Democratic Party.

In both houses, leaders indicated that the package may be modified somewhat to satisfy complaints and win approval but cautioned that the basic outlines of the agreement must be retained. "If the final product strays too far from the agreement, I think it will be difficult to pass," said Foley.

In the Senate, the middle appeared to be holding in both parties -- largely because of the specter of huge automatic spending cuts that would take effect if deficit reductions are not approved, members said.

"If you're floating in the water and a life preserver looms up but it looks a little shabby, you grab it because the alternative is drowning," said Sen. Warren B. Rudman (R-N.H.).

Lobbying efforts against various aspects of the plan appeared to be gathering steam slowly, including pressure from some groups of the elderly against proposed increases in Medicare premiums. But lawmakers said the lobbying so far is nowhere near as intense as they expect it to become, especially when committees begin to consider details for implementation of the plan.

Staff writers Dan Balz in Washington and Ann Devroy, traveling with Bush, contributed to this report.