Attorney General William P. Barr yesterday denied a congressional request for an independent investigation of whether Bush administration officials broke any laws in trying to contain political embarrassment over its Iraq policies, a decision that Democrats vehemently protested.

In a pointed, 14-page letter, Barr told the House Judiciary Committee that the Justice Department was perfectly capable of determining on its own whether anyone committed a crime -- either in managing an agricultural program that assisted Saddam Hussein's regime before the Iraqi invasion of Kuwait two years ago or in trying to limit political fallout stemming from that assistance. He said the committee's July request that he seek an independent counsel amounted to "no more than an unsupported assertion that some unnamed person may have violated a number of listed statutes."

Barr's response marked the first time an attorney general has denied a congressional request for an independent counsel since the passage of the independent counsel statute in 1978. It left House Democrats, who have spent months trying to unearth criminal activity, sputtering in anger but with no avenue for appeal.

Rep. Jack Brooks (D-Tex.), who heads the Judiciary Committee, said Barr was "stonewalling, plain and simple" -- acting as if Congress had to "present a signed and sealed indictment of criminal wrongdoing for the U.S. prosecutor to simply execute the next day."

Rep. Henry B. Gonzalez (D-Tex.), who chairs the Banking Committee, said Barr "is misusing his office and damaging the integrity of the Justice Department." Democratic presidential nominee Bill Clinton, campaigning in Philadelphia, also expressed disappointment, saying "it appears there is a lot of evidence there . . . to go on."

Especially with President Bush in a heated battle for reelection, House Democrats said, Barr should not be trusted to look into such potentially embarrassing allegations. Rep. Charles E. Schumer (D-N.Y.) said Barr should have at least agreed to open a 60-day preliminary inquiry -- the next step in determining whether to seek appointment of an independent counsel by a special division of the U.S. Court of Appeals here. "That's how bald-faced this was," Schumer said.

Barr defended a number of actions taken by the Bush administration regarding Iraq, vouching for them in his letter with comments such as "not a crime," "simply not criminal in any way," "nothing illegal" and "far from being a crime." He said the only questions worthy of criminal investigation are whether administration officials deliberately altered Commerce Department documents to conceal military sales to Iraq and purposely misled Congress about Iraq policy.

In both cases, he said, there is no reason why the department can't conduct its own investigation. "These are the kinds of allegations that are routinely investigated by the Public Integrity Section and there is no conflict of interest that precluded their handling these matters in the normal course," his letter said.

Barr specifically addressed charges that higher-ups in the administration ordered Dennis Kloske, then a Commerce Department undersecretary, to alter Commerce Department documents showing 771 exports to Iraq of technology and equipment that would be put to military use. Democrats like Schumer cite 68 changes to the documents, including the removal of some references to military applications, as the strongest single argument for an independent counsel.

Kloske said in an affidavit to the Judiciary Committee that an interagency panel approved changes in references to interagency deliberations. But Barr said "the evidence to date indicates that no official above Kloske had any involvement in the decision to make the changes in question."

He added that the evidence shows that Kloske made the changes because he believed the records were inaccurate and that the documents still conveyed the essential information.

Barr said the department has cleared former agriculture secretary Clayton Yeutter of allegations he made false statements to Congress. In February 1990, Yeutter told Sen. Patrick J. Leahy (D-Vt.) that foreign policy considerations did not contribute to a decision to approve $1 billion in new agricultural credits to Iraq, although a State Department memo shows Secretary of State James A. Baker III had called Yeutter to urge the credits be approved "on foreign policy grounds."

The attorney general said a 94-page Justice Department report delivered to the committee yesterday but not released, explains why Yeutter's statements "simply are not false." He said the department is still investigating other allegations of false statements by lower-level administration officials.

Barr dismissed suggestions that U.S. officials allowed Iraq to use the proceeds of the agricultural credit program to arm itself militarily. He said no evidence has yet emerged that such a diversion occurred, much less any evidence that U.S. officials "knowingly participated in or facilitated such diversion."

He repeated his own department's defense against allegations that it restricted federal prosecutors in Atlanta in their investigation of $5 billion in unauthorized loans to Iraq from the Atlanta branch of Banca Nazionale del Lavoro, an Italian-owned bank. Barr insisted that higher-ups at the department strove to strengthen, not undermine, a federal indictment that ultimately included several Iraqis. He said the federal judge who ultimately heard the case relied on "incorrect" information when he called for an independent counsel.

Brooks predicted that Barr's action would boost congressional support for renewal of the independent counsel statute, due to expire on Dec. 15. Key House Democrats indicated earlier this summer that a vote would be put off until next year, but a new Senate proposal on revising the statute appears to have increased support for renewal.

Staff writer R. Jeffrey Smith contributed to this report.