The Clinton administration yesterday handed the nation's technology industry the long-sought right to freely export software that cloaks electronic communications, setting aside years of warnings from law enforcement and defense officials that such a step would endanger national security.

With such worries in mind, the administration also announced legislation that would give law enforcement greater resources to combat the use of computers by criminals and terrorists, creating a new FBI unit to focus on cracking codes.

But the administration dropped the most controversial element of that effort -- a provision, included in earlier drafts, that would have allowed law enforcement officers to secretly search computers and disable secrecy codes as a prelude to wiretapping.

The new policy, announced in an afternoon briefing at the White House, delighted the high-tech industry, particularly those companies that sell "encryption software," as the codes are known. Such software is seen as critical to the continued growth of electronic commerce, fostering security as more people send their credit card numbers over the Internet.

For two decades, software companies have fought in vain for the right to export encryption products free of stringent licensing requirements. That aim has taken a back seat to worries that the codes could be used by terrorists and other criminal elements to hide their communications.

Such worries were decidedly muted at yesterday's briefing. After a beaming Commerce Secretary William Daley declared that the new policy will "basically open the entire commercial sector as a market for strong U.S. encryption products," Attorney General Janet Reno said she, too, was pleased.

"Today's announcement substantially relaxes export controls, allowing American industry to compete fairly in the international marketplace," Reno said. "Law enforcement maintains its ability to protect public safety."

Deputy Secretary of Defense John Hamre, long an opponent of relaxing the export ban, took the podium to declare that "the national security establishment -- the Department of Defense, the intelligence community -- strongly supports this strategy."

Pressed to explain the turnabout, Reno and Hamre said their concerns were assuaged by the administration's pending introduction of legislation called the Cyberspace Electronic Security Act of 1999, which would give the FBI $80 million over the next four years to establish the new code-cracking unit.

Reno acknowledged in her statement that "this legislation does not provide any new authority for law enforcement to be able to obtain usable evidence from criminals," though she later added that the measure will shield law enforcement from having to disclose its means of cracking codes.

Privacy advocates praised the administration's decision to abandon the push for secret searches of computers. But some worried that even within the new policy, the government would have room to weaken constitutional protections against unreasonable searches.

"The question is, how should the Fourth Amendment protect my information when it moves out of my desk drawer and out into the network?" said Alan Davidson, staff counsel for the Center for Democracy and Technology, a high-tech civil-liberties group based in Washington.

At the briefing, Reno was asked the degree to which Vice President Gore was involved in drafting the new policy. In seeking the presidency, Gore is hoping for strong support from the high-tech world. Tonight he is set to hold a fund-raiser in Los Altos, Calif., near Silicon Valley. Reno declined to characterize Gore's level of interest, though she said she recalled two meetings with the vice president to discuss the new policy.

High-tech leaders have long argued that efforts to deny terrorists encryption tools are futile, given that such software is readily available over the Internet.

In years past, individual shipments of encryption products required federal licenses before export. Under the new policy, companies will need one-time certification for their products. Then they will be free to export as many shipments as they like.

"It's certainly a heck of a marketing opportunity for us," said Art Coviello, who heads RSA Security, the company that owns the rights to a widely used form of encryption.

Some analysts said the administration's previous stance endangered one of the most promising high-tech sectors. The new policy prevents "a slow, grinding disappearance of the U.S. crypto industry," said Stewart Baker, who served as general counsel to the National Security Agency and now represents high-tech companies. "In the end, I think everybody realized that."

The administration's shift may also be attributed to the momentum that has developed for industry-backed legislation that would have gone even further to remove export limits -- a fact noted yesterday by Rep. Robert W. Goodlatte (R-Va.), sponsor of the Security and Freedom Through Encryption Act (SAFE).

Goodlatte praised the new policy, calling it "huge." Still, he said he will not withdraw his bill because the regulations spawned by yesterday's announcement will not be released until December. "There have been incidents where the regulations that have been implemented haven't lived up to the billing," he said.

The administration promised to veto Goodlatte's bill, should it pass, portraying it as a dangerous rollback of law enforcement authority.

"The only person who'd be safe if the SAFE bill were to pass," Hamre said, "would be spies."