President Bush last night vetoed the 1991 intelligence authorization bill, saying he could not accept a provision -- intended as an Iran-contra antidote -- requiring him to notify Congress when third countries or private citizens are to be used to carry out covert actions.

Bush said the requirement was too broad because the notification rule would cover even U.S. government "requests" to third parties to take part in covert activity.

"The mere existence of this provision could deter foreign governments from discussing certain topics with the United States at all," Bush said in a two-page veto message. He called it an attempt "to regulate diplomacy."

It was the first time a president has vetoed an intelligence authorization bill since Congress started passing them in 1978 in an effort to maintain better oversight over the U.S. intelligence community.

The surprise action, five weeks after Congress passed the measure, was sharply criticized on Capitol Hill. Sen. David L. Boren (D-Okla.), chairman of the Select Committee on Intelligence, said the veto was "a serious mistake" and the result of "bad advice from members of {Bush's} staff who incorrectly interpreted the legal effects" of some provisions in the bill.

House intelligence committee Chairman Anthony C. Beilenson (D-Calif.) said he was "deeply disappointed," especially since both committees went to "considerable lengths" to accommodate administration concerns before the bill was finally enacted. He said administration representatives advised them on the night of final passage that Bush would sign the bill.

"Now, five weeks after the fact, we learn that that advice was wrong," Beilenson said. He warned that the veto could disrupt what has been "an excellent working relationship between the intelligence committees and the administration."

Covert action funding by third countries, such as Saudi Arabia, and the use of private citizens, such as those enlisted by former White House aide Oliver L. North, were hallmarks of the Iran-contra scandal's secret arms sales to Iran and unauthorized support of the contra rebels in Nicaragua.

The authorization bill sought to address that issue by requiring that the president include in his covert-action notifications to Congress a statement of "whether it is contemplated" that third parties will be used "in any significant way."

Bush said the provision was too vague and "could have a chilling effect on the ability of our diplomats to conduct highly sensitive discussions concerning projects that are vital to our national security."

In a letter to Bush Thursday, Boren, Beilenson and Sen. William S. Cohen (R-Maine), alerted to last-minute administration concerns, assured him that notice to Congress of "preliminary" approaches and consultations was not necessary. Only after third-party assistance was determined feasible and incorporated in an official request, they said, would the requirement for a finding come into play.

In his veto message, Bush said he was also disturbed by language in the conference report on the bill, saying that prior notice of covert actions should be withheld only in "exigent circumstances" and only for "a few days." He also took exception to restrictions in the classified section of the bill, apparently referring to limits on covert aid for Angola, Cambodia and Afghanistan.

Under the National Security Act, U.S. intelligence appropriations may be obligated or spent "only if those funds were specifically authorized by the Congress for use for such activities." House and Senate committee staffers said they would study the effect of that rule in light of the veto but added that the administration probably will continue spending on the grounds that the money has also been hidden in the defense authorization bill.

The defense authorization bill, which Bush signed, contains some of the same covert action restrictions that Bush complained about last night, sources said, but not in as much detail. The intelligence committees are expected to push for early passage of a modified bill when Congress reconvenes next month.