Hospitals and health care workers who administer or take smallpox vaccine in the program scheduled to begin later this month will not be held liable for adverse consequences to others, federal health officials said yesterday.

But the Bush administration has rejected appeals to create a compensation fund for patients who suffer complications from the vaccine's well-known side effects.

The liability update was welcomed by hospitals and physician groups, who have lobbied for broad legal protections for the 500,000 medical workers who will serve as a sort of domestic front line against biological attack. The new interpretation, to be formally released by the Department of Justice later this week, means that neither hospitals nor their employees can be sued if someone is injured by the smallpox vaccine.

But experts advising Health and Human Services Secretary Tommy G. Thompson and some administration officials acknowledged lingering concerns over the likelihood that a small number of people will experience severe reactions and have no recourse.

"This could deter some people from being vaccinated," said D.A. Henderson, a top HHS adviser and chairman of the Secretary's Council on Public Health Preparedness.

Last month President Bush announced plans to resume a national smallpox inoculation program, after a 30-year pause, because of increased fears the deadly virus could be used as a weapon. The live vaccine is the only protection or treatment available, and it is not without risks.

For every 1 million people vaccinated, between 15 and 42 will experience severe reactions such as swelling of the brain or blindness, and one or two will die, according to historical data. Many others will miss work because of fever, rash or other flu-like symptoms.

In most states, workers' compensation protection will cover treatment of the adverse effects, said Michael Osterholm, a council member and director of the Center for Infectious Disease Research and Policy at the University of Minnesota. But in states where workers' compensation does not apply, people injured by the vaccine would have to sue the federal government and prove negligence.

Public health experts have pressed the Bush administration to set up a compensation program modeled after the well-respected Vaccine Injury Compensation Fund, which pays set amounts of money to people injured by routine childhood immunizations.

Henderson said the "potentially very large" cost of compensating people injured by the smallpox vaccine has been a major stumbling block in developing a new smallpox compensation fund.

However, Colleen Conway-Welch, dean of the Vanderbilt University School of Nursing, said the lack of compensation complicates plans to recruit nursing students for smallpox response teams.

The decision by Bush administration lawyers appears to be a double-whammy for hospital patients inadvertently exposed to the vaccine through contact with a vaccinated individual, said Margaret Hamburg, vice president for biological programs at the Nuclear Threat Initiative. There is no set compensation for them, she said, and "no right to sue for compensation. That's a real problem."