I. Lewis Libby and Karl Rove, one facing indictment, the other hoping to avoid one, are pursuing a similar strategy to prove their innocence in the CIA leak case: showing they are guilty of memory lapses, not lies.

Libby, indicted Friday on five counts of lying and obstructing justice, contends that any misleading information he provided to the grand jury or federal investigators was the result of a hectic schedule and foggy recollections, according to people familiar with his thinking.

"Mr. Libby testified to the best of his recollection on all occasions," Joseph A. Tate, Libby's lawyer, said in his first statement on the case, released Friday. Libby's friends plan to set up a legal defense fund soon to help him fight the charges, according to one person familiar with the effort.

Rove, who sources said narrowly escaped indictment through last-minute negotiations, is working privately to convince Special Counsel Patrick J. Fitzgerald that he did not lie to a grand jury about his role in the disclosure of CIA operative Valerie Plame's identity. With Fitzgerald threatening to indict Rove, the White House deputy chief of staff provided him with new information last week that prompted Fitzgerald to rethink charging him with making false statements, according to two people close to the case.

A source close to Rove said President Bush's closest adviser stands ready to provide the prosecutor with anything else he needs in the days ahead, and remains optimistic an indictment is not forthcoming. Rove expects a decision soon.

Fitzgerald "understands what is at stake here," said a source close to Rove. "We are going to find out if we are going to get good or bad news."

Fitzgerald has largely completed the 22-month investigation into whether any Bush administration official leaked Plame's name, without charging anyone with violating the laws that make such actions illegal in some circumstances.

Instead, the grand jury indicted Libby, Vice President Cheney's chief of staff, on two counts of making false statements, two counts of perjury and one count of obstructing justice. Fitzgerald has not concluded his investigation of Rove, which people close to the case say focuses on at least one misleading statement Rove made to the grand jury.

While some Republicans dismissed the charges against Libby, who resigned Friday, as technicalities unrelated to deliberately unmasking a CIA agent, allegations of lies put Libby -- and possibly Rove -- in serious legal jeopardy and are creating a new set of political problems for the Bush White House.

"Libby is tripped up over the investigation, not over the crime, and I think that is significant," said Rep. Jack Kingston (R-Ga.). Still, "the impression you get is he was a good foot soldier for many years, but he stepped over the boundary in his job, and no one is above the law."

Republicans close to the White House said Bush was relieved on Friday that Rove and other White House officials were not implicated in the leak case but plans to say little about the Libby indictment at least until Rove's situation becomes clear.

The administration is bracing for a barrage of criticism about the Libby indictment and its flawed case for invading Iraq. Yet, White House aides believe they escaped a much more damaging and demoralizing outcome when Fitzgerald's grand jury did not charge officials with exposing Plame or conspiring to do so, saying pointedly at his news conference Friday that war critics should draw no conclusions from his findings, the Republican sources said.

The administration plan now is to shift attention to the courts by nominating a new Supreme Court justice as early as Monday and showing a renewed commitment to holding down federal spending. Both moves are designed in large part to placate the president's conservative base, White House aides said.

Libby, who several sources said is searching for a new legal and public relations team in anticipation of a trial, has provided scant information about the substance of his defense. But from a statement Tate, Libby's lead attorney, issued after the indictment, it was clear that Libby will argue that he did not purposely lie to protect himself or anyone else in the White House.

This will be no easy task, according to legal experts.

In the indictment, Fitzgerald asserts that Libby lied repeatedly in the course of the investigation: at least twice to the FBI and twice under oath before the grand jury. Most troublesome for Libby, according to legal experts, is his testimony that he first learned of Plame and her CIA role almost casually from Tim Russert, host of NBC's "Meet the Press."

Fitzgerald contends that Russert never discussed Plame with Libby. Moreover, the indictment states, Libby had learned about Plame more than a month before he talked to Russert, from at least three major sources: the State Department, the CIA and Cheney.

"The most damaging thing is that Libby told the grand jury he learned [about Plame] from a reporter and they have so many details of how he learned it elsewhere," Sen. Charles E. Schumer (D-N.Y.) said yesterday. "It leads to the question, 'What is he covering up?' "

Tate, who did not return phone calls yesterday, did not address specifics in his statement. But he argued that different people can have different recollections of conversations and events without violating the law.

"We are quite distressed the special counsel has now sought to pursue alleged inconsistencies in Mr. Libby's recollection and those of others and to charge such inconsistencies as false statements," Tate's statement said. "As lawyers, we recognize that a person's recollection and memory of events will not always match those of other people, particularly when they are asked to testify months after the events occurred."

To prove Libby lied, Fitzgerald will rely on the testimony of three journalists -- Russert, Time magazine's Matthew Cooper and the New York Times' Judith Miller -- as well as a number of government officials who provided information about how Libby learned about Plame.

To prove he did not lie, Libby will contend it is entirely plausible that a high-level staffer juggling a number of important issues could forget how he first learned an important piece of information and seek to show he never purposely misled investigators or the grand jury. In the statement, Tate talked about Libby's involvement in a "hectic rush" of issues "at a busy time of our government."

Another possible defense, a person close to Libby said, is that it makes no logical sense for a person as smart as Libby to engage in a pattern of lies and then encourage reporters to testify to investigators, as Libby did when he freed journalists from confidentiality agreements.

Victoria Toensing, a Justice Department official under President Ronald Reagan, agreed. "My basic factual argument would be that he had nothing to hide, so why would he say things he did not need to say?" she said.

Rove has been in negotiations with the prosecutor in recent weeks to prove he did not purposely deceive the grand jury. He has told friends he is most concerned about being charged with providing false statements because he did not initially tell the grand jury about a conversation he had with Cooper about Plame before her identity was disclosed.

In an effort to show that Rove essentially forgot about the conversation, his legal team has provided Fitzgerald with new information, which sources close to Rove have refused to describe.