The Clinton administration is preparing to dramatically raise its estimate of health threats from dioxin, citing new evidence of cancer risk from exposure to the toxic chemical compound.

A draft of a long-awaited report by the Environmental Protection Agency concludes for the first time that dioxin is a "human carcinogen." The report notes that emissions of dioxin have plummeted from their peak levels in the 1970s but still may pose a significant cancer threat to some people who ingest the chemical through foods in a normal diet.

Dioxin comes from both natural and industrial sources, such as medical and municipal waste incineration and paper-pulp production. The chemical enters the food chain when animals eat contaminated plants. Dioxin then accumulates in the fat of mammals and fish. It has been linked to several cancers in humans, including lymphomas and lung cancer.

For a small segment of the population who eat large amounts of fatty foods, such as meats and dairy products that are relatively high in dioxins, the odds of developing cancer could be as high as 1 in 100, the report says. That estimate places the risk 10 times as high as the EPA's previous projections.

Exposure to dioxin occurs over a lifetime, and the danger is cumulative, the report said. Studies have found that people all over the globe have some dioxin in their bodies.

The report, obtained by The Washington Post, links low-grade exposure to dioxin to a wide array of other health problems, including changes in hormone levels as well as developmental defects in babies and children.

It also concludes that children's dioxin intake is proportionally much higher than adults' because of the presence of the chemical in dairy products and even breast milk.

"It's the Darth Vader of toxic chemicals because it affects so many systems [of the body]," said Richard Clapp, a cancer epidemiologist at Boston University's School of Public Health. "The amounts are coming down, but even small amounts are harmful."

The EPA's draft assessment, if finalized in its current form, would solidify dioxin's status as one of the most potent chemical toxins known to science.

Although the risk from dioxin varies widely--and may be nearly zero for many people--the findings suggest that dioxin already contributes to a significant number of cancer deaths each year. Environmentalists, extrapolating from the EPA's risk findings, have estimated that about 100 of the roughly 1,400 cancer deaths occurring daily in the United States are attributable to dioxin.

Officials predicted yesterday that the report would stimulate many questions about the safety of the food supply. Administration officials said, however, that the higher dioxin risks should not discourage people from eating nutritious foods and following dietary guidelines emphasizing low-fat foods. The report stressed that mothers should continue to breast-feed because the benefits far outweigh the risk of dioxin exposure.

In an indication of the potentially far-reaching implications of the report, the White House has intervened in an unusual way to coordinate its release. The report is scheduled to be released in June and will be evaluated by scientific reviewers.

It's not clear that the findings will lead to new regulations on dioxin emissions, but EPA briefing papers discussed several strategies for reducing human exposure to the chemical, including better monitoring.

The findings came as a surprise even to EPA policymakers who have tracked slowly falling levels of dioxin in the environment--the result of a series of tough new regulations on dioxin-emitting industries.

The EPA said industrial emissions of dioxins have been reduced some 80 percent between 1987 and 1995.

"We're heading in the right direction because we're seeing dioxin levels decrease," said one administration official who spoke on the condition of anonymity. But while dioxin levels in the population are declining, "our ability to understand the risk has improved," the official said.

Dioxin came to public attention as the contaminant in Agent Orange, a controversial herbicide used by U.S. forces in Vietnam. In 1983, the EPA forced the evacuation and demolition of the entire town of Times Beach, Mo., after the discovery of dioxin contamination on city streets.

Industry scientists have long accused the EPA of overstating the threat from dioxin, and many believed the agency's review would result in a downgrading of the official risk estimate.

C.T. Kip Howlett, vice president and executive director of the Chlorine Chemistry Council, said the EPA has a conservative view of the health risks of dioxin and they are "out of sync" with the rest of the world's view on safe levels of the chemical.

Howlett said the agency "has a real problem on it's hands" in expressing apocalyptic concern about dioxin, while also stressing that the food supply is safe, breast feeding is the right thing to do and regulatory initiatives are working.

"There are a lot of things in this report that are counterintuitive to what the facts are," Howlett said.

Keith Holman, chief regulatory counsel of the U.S. Chamber of Commerce, said no industry wants to produce dioxin--which is an unintended by-product of combustion--"but let's make sure we have sound science before we regulate down to a zero level where it's clearly not warranted."

Environmentalists supported the EPA's findings but raised concerns that the agency would use falling dioxin levels as an excuse to delay any further tightening of regulations to control dioxins.

"They seem to be taking a triage approach, not worrying about emissions but dietary exposures of human beings," said Rick Hind of Greenpeace International's toxics program. "That suggests they can't walk and chew gun at the same time."

The agency's understanding of dioxin has improved since the agency began in-depth studies in 1991, and this installment is particularly important because it includes results of landmark human epidemiological studies from Europe and the United States.

In a briefing to EPA managers on May 10, the agency said it expected "many stakeholders to take dramatic action when the draft reassessment is released," and pressure from other interests given the "extraordinary" findings of the reassessment.

For the first time, the agency's draft report classifies the most potent form of dioxin--2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD)--as a "human carcinogen," a step above the previous ranking of "probable carcinogen." More than 100 other dioxin-like compounds were classified as "likely" human carcinogens.

Over the past five years, the EPA has imposed regulations on major dioxin emitters, including municipal waste combustors, medical waste incinerators, hazardous waste incinerators, cement kilns that burn hazardous waste, pulp and paper operations, and sources of PCBs.

When those regulations become fully effective over the next few years, the agency expects further declines of dioxin levels.

"We still have a certain amount of dioxin circulating in the environment. We need to focus on the idea of reducing exposure and not simply going after all sources to the environment," said one administration official.

One source likely to be targeted is uncontrolled residential waste burning, such as burning trash in back yards, particularly in rural areas, EPA briefing papers said. Such burning is "one of the largest unaddressed dioxin sources and one that could have a disproportionally large contribution to the food supply."

The agency also is discussing the possible regulation of other sources such as sludge disposal from privately owned waste-treatment facilities and the regulation of other air sources of pollution.

Sources said that there have been lengthy discussions at the EPA on how to release the report and answer questions stemming from it.

Several federal agencies have been involved in the preparation of the report and are expected to participate in the review of it. Agencies such as the Agriculture Department and the Food and Drug Administration, as well as the Food Safety Council, are readying their own responses to questions about the safety of the food supply, advice on following the dietary guidelines and breast feeding.

"People were not expecting this was an issue they had to deal with," an administration official said. "Over the last eight years there have been regulations that have already cut dioxin emissions from the most likely sources."