The Bush administration has abandoned hopes it can work with President Mohammad Khatami and his reformist allies in the Iranian government and is turning its attention to appealing directly to democracy supporters among the Iranian people, administration officials said.

The policy shift, which scuttles a five-year effort in which the United States tried to explore ways to work with Khatami and encourage a reform agenda in Iran, follows an intensive review within the administration over whether to adopt a harder line toward a government President Bush has labeled part of the "axis of evil."

A senior administration official said Bush has concluded with his senior foreign policy advisers that Khatami and his supporters in the government "are too weak, ineffective and not serious about delivering on their promises" to transform Iranian society. Instead, the official said, "we have made a conscious decision to associate with the aspirations of Iranian people. We will not play, if you like, the factional politics of reform versus hard-line."

Bush signaled the change publicly in a strongly worded presidential statement in which he praised large pro-democracy street demonstrations in Iran. The shift cheered foreign policy experts who had urged a tougher approach toward Tehran and was a setback for the State Department, which had spearheaded efforts to engage the Khatami leadership.

In the statement, Bush said that "uncompromising, destructive policies have persisted" in Iran despite recent presidential and parliamentary elections that have brought reform advocates to power. He accused Iranian leaders and their families of continuing "to obstruct reform while reaping unfair benefits" and demanded that the government listen to the Iranian people, who he said have "no better friend than the United States."

Bush approved the statement earlier this month after pro-democracy protesters and Iranian security forces clashed at the demonstrations, and a top Iranian cleric, Ayatollah Jalaleddin Taheri, resigned his post to denounce what he called the "incompetence of the authorities and the failure of the political structure."

Although virtually unnoticed in the United States when issued July 12, Bush's statement spawned fierce complaints from Iranian officials and resulted in government efforts to organize anti-U.S. demonstrations in Tehran last week, criticizing Bush for interfering in Iran's internal affairs.

The Bush administration broadcast its support to the Iranian demonstrators through the Voice of America, which carried reports on Bush's statement. Zalmay M. Khalilzad, a senior director at the National Security Council responsible for Iranian policy, gave a television interview in Farsi on Friday promoting the policy. The interview was beamed into Iran via VOA.

Khatami took office in 1997 and was reelected last year by a wide majority. He has been viewed as more open-minded to relations with the United States and to opening up Iran to democratic reforms than Iran's supreme leader, Ayatollah Ali Khamenei, and his fellow clerics. The Clinton and Bush administrations, until now, had sought to probe whether Khatami would prove to be a fruitful alternative to the fundamentalists, while Europeans have been more eager to open direct trade and political links with the Khatami government.

Since Bush grouped Iran with Iraq and North Korea as members of the "axis of evil" in his State of the Union speech in January, there has been an intense debate within the administration over how hard to signal its support for the reform movement. With signs that the demonstrations were gathering momentum, the debate this month swung toward the approach urged by the National Security Council and Pentagon, taking the State Department by surprise, officials said.

A few days before Bush's statement was issued, State Department spokesman Richard Boucher shrugged off a suggestion that the United States would issue a comment on the student demonstrations. "The official U.S. line is, you know, we don't comment when people demonstrate," Boucher said.

"The White House kind of surprised a few people with their activity on this," a State Department official said.

"This statement is evidence that they've [the State Department] been losing that debate," said Michael Rubin, a visiting fellow at the American Enterprise Institute who supports the administration's new emphasis. "Engagement sounds good in theory, but in the case of Iran, it does not work in practice."

But Martin Indyk, a former U.S. ambassador to Israel now at the Brookings Institution, said the new approach carried significant risks. "This may help those we are trying to harm and harm those we are trying to help," he said, because reformers may be tagged as agents of the United States.

"The same principle applies to Iran as the Palestinians," Indyk said. "We should be careful about leaving the impression that we intend to determine who the leadership will be."

Relations with the United States have been a key issue in Iran since the shah was overthrown in 1979. Earlier this year, Khamenei declared that talks with "the Great Satan" amounted to treason, and the Iranian justice ministry announced it would try journalists who promoted dialogue with the United States.

Both Khamenei and Khatami have denounced Bush's statement. "Different factions, although they have disputes, told the Americans to mind their own business and told them not to interfere in Iran's internal affairs," Khamenei told worshipers who chanted "Death to America" last week. "Khatami took a position against Bush and slapped him in the mouth," Khamenei said approvingly.

The fact that Bush issued the statement in his own name made a deep impression in Iran. "Usually, the White House or the State Department issue statements or express views on various incidents in other countries," said Hasan Rowhani, secretary of Iran's Supreme National Security Council. "This time around, the American president himself issued a statement, and this showed the importance of the decision."

Rowhani dismissed Bush's statement as "insulting and impudent, as well as devious. . . . It was also extremely ridiculous and simplistic."

Some administration officials believe the reaction inside Iran to the statement is evidence it is having its desired effect. "It has increased tensions within the regime," an official said, citing a dispute over the weekend between the Republican Guards and reformers over whether the democracy advocates were "pawns" in a U.S. plan to invade Iran.

But another administration official said the jury is still out. "There is a view that the country is ripe for a change, that you can give it a flick and it is transformed," he said. "We need to wait and sort this out. There is a question about whether opinion leaders in Iran will consider this as gross meddling or whether they will see it as well-timed."