The Bush administration yesterday abandoned a rule it had issued a month ago that allowed states to limit the use of hospital emergency rooms by patients on Medicaid, acquiescing to fierce opposition from members of Congress and advocates for the poor.

In a letter sent late yesterday to leaders of the Senate Finance Committee, the top federal administrator who oversees Medicaid wrote that "we are rescinding" the rule, which essentially undercut a basic protection that Congress had guaranteed every Medicaid patient in managed care.

The abrupt pivot came a day after Republican and Democratic Senate aides protested restrictions on emergency room use at a meeting with administration health officials -- and hours before a Democratic senator had planned to seek a Senate vote to try to overturn it. The shift also comes just a week before President Bush intends to ask Congress to make expensive and controversial changes to other aspects of federal health policy, notably Medicare, the other large public insurance program, which covers the elderly.

The letter's author, Thomas A. Scully, administrator of the Centers for Medicare and Medicaid Services, said the administration was eager to defuse a dispute over what he called the "rather overblown issue" of emergency room use by Medicaid patients, at a time when "we are trying to get a lot of stuff done."

"We weren't troubled by the policy. We were troubled by the controversy it caused," Scully said in an interview. "We want to get off to a friendly, happy, bipartisan start of the year. This clearly wasn't doing it."

A White House official said the president's aides were aware of the agency's latest decision and supported it.

The pivot delighted senators and House members of both political parties, along with outside consumer health lobbyists, who had said the rule might impede the ability of some of the nation's neediest patients to get rapid care when they need it. "Hallelujah!" said Ron Pollack, executive director of Families USA, a liberal health care lobby, who had said late last week that opponents were preparing to contest the policy in federal court.

Sen. Bob Graham (D-Fla.), who sponsored the emergency room protection and had been preparing to ask for the Senate vote last night, praised the administration for changing its position. "Returning to the original standard will not only protect coverage for Medicaid patients, it will save lives," Graham said. Sen. Edward M. Kennedy (D-Mass.) was more pointed, saying in a statement that "it is unconscionable that the administration would have issued and defended this policy in the first place."

The reversal ends a brief, and unusual, episode in the history of Medicaid, a program shared by the federal government and states that provides insurance to 37 million poor or disabled people. The rule had the potential to affect as many as 23 million Medicaid patients who are required by states to belong to health maintenance organizations or other forms of managed care.

Already, states are permitted to restrict payments for use of emergency rooms by people under "fee for service" Medicaid, in which patients choose whatever doctors they want. But under a 1997 law, intended to protect the increasing proportion of Medicaid patients in managed care, states must pay for emergency room services whenever a "prudent layperson" could reasonably think they have a true medical emergency. The rule, issued in late December, reinterpreted that law.

The change was odd because the nation's governors and Medicaid directors had not requested it, even though they lobby often for other kinds of freedom to run their Medicaid programs -- and many of them lately have been leaning hard, and unsuccessfully, on the administration for financial help with Medicaid deficits.

Gregory A. Vadner, vice chairman of the National Association of State Medicaid Directors, said the reversal would have little practical effect because states had not begun planning to restrict emergency room use based on the administration's rule. "Really, in the big scheme of things, I don't think it will be something that all the states will be greatly disappointed about," said Vadner, Missouri's Medicaid director.

When members of Congress began to protest last week, administration officials defended their decision by saying their new policy would create equal rules for all Medicaid patients, regardless of whether they were in managed care. The administration also said the rule was an attempt to curb reliance on emergency rooms for routine care that is more efficient -- and economical -- for them to get in doctors' offices.

In yesterday's letter to Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) and the ranking member, Sen. Max Baucus (D-Mont.), Scully said the administration wanted to work with Congress to find other ways of discouraging unnecessary use of emergency rooms.

Medicaid administrator Thomas A. Scully said the administration wanted to defuse a dispute.