Sen. James M. Inhofe (R-Okla.) yesterday dropped his threat to block action on presidential nominations after President Clinton assured Senate leaders he will give them ample advance notice before he installs an unconfirmed nominee during a congressional recess.

Inhofe served notice early last week that he would put "holds" on all civilian nominations to protest the president's appointment of gay San Francisco philanthropist James C. Hormel as ambassador to Luxembourg during the Memorial Day recess.

Among the nominees threatened by Inhofe's action were Lawrence W. Summers, tapped by Clinton to succeed outgoing Treasury Secretary Robert E. Rubin, and Richard Holbrooke, who was named ambassador to the United Nations after former ambassador Bill Richardson left to become energy secretary.

Hormel's nomination had been stalled by Republican conservatives, and Clinton bypassed the Senate by installing Hormel in the post, employing a constitutional provision allowing temporary appointments when Congress is not in town.

Inhofe's retaliatory action triggered a dispute that threatened to worsen the already testy relations between the White House and Senate Republicans and to cause trouble for both sides. Clinton faced problems with nominations for his remaining 19 months in office, while Republican leaders were clearly nervous about scaring jittery money markets by threatening to hold up action on a new treasury secretary. The markets already quivered twice in response to threatened delays in filling the treasury post.

Senate Majority Leader Trent Lott (R-Miss.) had said that he recognizes any senator's right to hold up a nomination temporarily but signaled that he would not honor such a hold indefinitely. Lott was actively involved in resolving the dispute and was pleased by the outcome, according to an aide.

The Senate Finance Committee has scheduled a hearing for today on Summer's nomination. The first of three days of hearings on Holbrooke's nomination is also scheduled for today. Key senators have said they expect both men to be confirmed eventually.

Both sides in the nomination dispute claimed vindication. But it appeared that the White House yielded little ground, offering only to go back to an earlier practice of notifying Senate leaders of any planned appointments before the start of a recess -- reflecting a detente worked out 14 years ago between President Ronald Reagan and Sen. Robert C. Byrd (D-W.Va.).

In the case of Hormel, the White House did not notify Republican leaders until the day before Clinton made the appointment, near the end of the weeklong Memorial Day recess.

But a source said this was done only because it was clear that some GOP conservatives were going to block Hormel from being confirmed, even though he appeared to have had the votes necessary for confirmation.

Hormel is the country's first openly gay ambassador, and critics charged that he would use the post to pursue a gay rights agenda -- a charge that his supporters said was nonsense.

In a letter yesterday to Lott, Clinton said he had "made it a practice to notify Senate leaders in advance of our intentions in this regard, and this precedent will continue to be observed." In return, he said, he expects "expeditious consideration" of his nominees.

Inhofe later said he thought "the president is being responsible and I commend him for it."