Rep. John R. Kasich (R-Ohio), the energetic chairman of the House Budget Committee whose candidacy for president never took root this year, will quit the race today and endorse Texas Gov. George W. Bush for the GOP nomination, Republican sources said yesterday.

Kasich's decision came as another presidential candidate, Sen. Robert C. Smith (N.H.), formally announced his resignation from the Republican Party in a 50-minute Senate floor speech angrily denouncing the party for abandoning principle. The Republican commitment to gun rights and to the rights of the unborn "is a fraud and everyone knows it," he told his colleagues.

Senate Republicans will make the final decision, but aides said they expect Smith will be permitted to remain in the caucus and keep his ethics committee chairmanship. The party's unwillingness to impose sanctions reflects fears that more conservatives could bolt the party and possibly cost Republicans the election in 2000.

Meanwhile, Republican presidential candidate Steve Forbes, whose self-funded campaign will have as much money as Bush's, signaled his intention to wage a fierce campaign against the Texas governor. In an interview between campaign events in Iowa, Forbes ridiculed Bush's campaign agenda as light on substance and warned, "We're going to fight an issues campaign and if he doesn't want that kind of heat, he should stay out of the kitchen."

Forbes also stepped up his attacks on the Federal Reserve, blaming the monetary institution for the crisis in American agriculture. He said if he were to become president, he would seek to nominate Jack Kemp, the former housing secretary and an advocate of supply side economics and the gold standard, to replace Fed Chairman Alan Greenspan.

Kasich's endorsement of Bush will come this afternoon at the Ronald Reagan Building on Pennsylvania Avenue, with the Texas governor at his side. Republican officials said the Ohio congressman, who tried to rally support for his candidacy by proposing big tax cuts and attacking the Washington elite, ultimately concluded he had little chance of winning the nomination in the face of Bush's huge advantage in money and endorsements.

During the first six months of the year, Kasich raised roughly $3 million for his campaign, compared with more than $36 million raised by Bush during the same period, and remained in the low single digits in the polls.

Officials said they expect Kasich to adhere to an earlier decision to leave the House at the end of his current term. He has given no hint about his plans, and several GOP sources said Kasich has had no conversations with the Bush campaign about a possible job if the Texas governor were to become president.

Kasich's decision to quit a race he never formally entered opens the way for Bush to nail down the support of the Ohio political establishment. "You'll see the state line up very, very quickly for Bush," one Republican said.

Smith's decision to quit the Republican Party further shrinks the big GOP field of candidates, but the New Hampshire senator may continue to run for president by seeking the nomination of the U.S. Taxpayers Party. That prospect makes GOP leaders uneasy about conservative defections in November 2000.

Two other conservative presidential candidates, Patrick J. Buchanan and Gary Bauer, said they would stay in the Republican presidential race, but Buchanan said on CBS's "Face The Nation" Sunday that "the Republican establishment is doing its best right now to almost force a fracture in the GOP."

Conservative leader Paul M. Weyrich, head of the Free Congress Foundation, praised Smith in a statement. "If Republicans are not going to fight for the Constitution and the sovereignty of the USA, oppose illegal wars and support the unborn, then why do we need a Republican Congress?"

Forbes, in Iowa, also criticized the Republican-controlled Congress. He accused congressional Republicans of timidity on cutting taxes, saying the party's new plans would be phased in over too many years. He also attacked congressional Republicans for failing to bring more charges against President Clinton during the impeachment inquiry. Forbes said the allegations involving Monica S. Lewinsky were "the least of it."

Forbes said Smith's decision to quit the party was symptomatic of the party's failure to have a strong message. "If you have mush and don't have something inspiring to offer voters, something substantive, they're going to drift away," he said.

Asked if he was suggesting that Bush's campaign message is mush, he replied: "What is the message? Where is the substance? As another person used to say, `Where's the beef?' "

Forbes then made clear he won't shrink from a round of negative ads aimed at Bush's record in Texas and his stance on key issues. "If my campaign had no principles and no agenda and no issues, yes, it would descend into how you part your hair or what you did when you were a sophomore in college," he said. "But that's not the basis of this campaign."

He added, "We're going to fight hard on issues. I think people want a real debate. People don't think we had one in '96."

Balz reported from Carroll, Iowa; Edsall, from Washington.

CAPTION: Sen. Robert C. Smith (N.H.) accepts congratulations after Senate floor speech announcing his resignation from GOP.

CAPTION: Rep. John R. Kasich (R-Ohio), whose presidential campaign remained in the low single digits in the polls, will endorse Gov. George W. Bush.(Photo ran in an earlier edition)