Congress yesterday approved a $22 billion package of tax credits and grant money designed to reflect the changing needs of a nation in which more than half the mothers of small children work outside the home, the first child-care legislation passed in peacetime.

Although the bulk of the money will go to poor working families, who can spend it as they wish, the five-year spending package also lays the groundwork for a broad federal policy to encourage and govern those who provide child-care services.

The legislation, which has the approval of the White House, is part of the $492 billion deficit-reduction package approved by Congress.

If signed into law, as expected, it will be the first federal child-care legislation since World War II, when Congress voted to help young mothers involved in war production care for their children. President Richard M. Nixon vetoed a child-care bill approved by Congress in 1971.

As far as child-care advocates are concerned, the heart of the legislation is a three-year, $2.5 billion block grant program for the states to distribute to parents and day-care providers. Such grant programs have been the most controversial part of the nearly five-year debate on child care.

Both the Bush and Reagan administrations attacked the block grant approach as a throwback to the Great Society programs of the 1960s with federal standards and large new bureaucracies. The Bush administration wanted little more than the tax credits for the working poor.

In the end, a compromise was worked out between the White House and congressional Democrats to give the money to the states to use as they saw fit, but requires that any child-care provider receiving the money meet minimum state health and safety standards -- including immunization to prevent the spread of infectious diseases. The standards apply even if the money is used for child care in a private home.

"For the first time child care will have a {federal} policy," said Sen. Christopher J. Dodd (D-Conn.) after the compromise was reached. Dodd was one of the principal architects of the legislation.

Child-care advocates such as the Children's Defense Fund and organized labor praised the bill as a platform to build on for the future even though it contains less than they would have liked.

The block grant program stipulates that 75 percent of the grant money go either to parents or providers of day-care services. Parents would be eligible for the federal aid in the form of vouchers if their incomes did not exceed 75 percent of the median income of the state in which they lived. The remaining 25 percent of the $2.5 billion program would be earmarked for use for either after-school child care, known as "latchkey" programs, or preschool programs. Head Start, a separate program aimed at educating preschool children, contains additional funds for latchkey children.

The broadest immediate impact of the bill will come from the earned income tax credit provision, which earmarks $12.3 billion over the next five years for families with incomes of less than $20,000 a year. The legislation provides little direct aid to middle-income families.

By the end of the five-year period, eligible families with two or more young children will receive a maximum tax credit of 25 percent for every dollar earned. Families with only one child will receive a maximum credit of 23 percent over the same period. As incomes rise, the percentage of the tax credit drops until it eventually phases out at $20,000. Low-income families with children under 1 year old would receive an additional tax credit.

When a family pays so little income taxes that its taxes are smaller than the credits allowed, the government will send them a check for the amount of the credit.

The legislation also creates a $5.2 billion child health-care credit. Families eligible for the child-care credit would also receive a credit to help offset the health insurance costs. This credit is much smaller than the child-care credit.

Poor working families now receiving public assistance would be eligible for additional child-care aid. The legislation sets up a $1.5 billion program that would assist these families if they were in danger of losing their jobs because they could not afford child care.