WASHINGTON (AP) - The White House signaled Tuesday that it would allow religious charities to receive federal payment for social services even if the groups won't hire gays and lesbians, much as legislation in Congress would allow discrimination based on religion.

Churches and other religious groups should be allowed to stick to their principles - hiring only heterosexuals, or only people of their own religion - in running secular programs with government money, Vice President Dick Cheney and other administration officials said.

The issue of religious preference has coursed through the debate on President Bush's ``faith-based initiative,'' but the question of sexual orientation is new.

Specifically, administration officials said they were considering a new regulation that would allow religious groups to bypass local and state laws that bar discrimination against gays when the groups take federal dollars.

An internal report by the Salvation Army, the nation's largest charity, said the issue had been settled, and it suggested the administration would adopt the change in exchange for the group's support of legislation opening government programs to religious charities.

On Tuesday, both the administration and the Salvation Army said no promises had been made, but both suggested the regulation was needed.

``A key part of the president's faith-based initiative is to make certain that, in order to acquire or to participate in providing these social services with government funds, we not require fundamental changes in the underlying principles and organizing doctrines, if you will, of the organizations that participate,'' Cheney said Tuesday.

Gay rights groups reacted strongly to the prospect that Bush might try to override local anti-discrimination laws.

``President Bush regularly talks about seeing into the good hearts of people. Does he think that gay people do not have the same good hearts and moral values as others? How else could he support, in the name of faith, taking a position that values gay people less than others?'' said a statement from Kirsten Kingdon, executive director of Parents, Families and Friends of Lesbians and Gays.

And the matter spelled fresh controversy for Bush's overall legislation.

``It will just deepen opposition and make many of my colleagues more skeptical,'' said Sen. Joseph Lieberman, D-Conn., who supports the idea behind the legislation but has yet to sponsor a bill.

Rep. Anthony Weiner, D-N.Y., who has been struggling over whether to support the bill, agreed. ``It is getting more and more difficult to overcome my qualms,'' he said.

Some state and local laws bar discrimination in hiring gays and lesbians. Others require employers to offer health insurance and other benefits to the domestic partners of gay employees. Typically, these laws do not apply to religious groups. But it's not clear whether groups lose that exemption once they accept taxpayer dollars.

The Bush administration could issue guidance from the Office of Management and Budget banning enforcement of these laws for religious groups that get federal dollars, which often pass through local and state government.

The Salvation Army report explicitly links the regulatory action with the legislation, now pending in the House.

``It is important that the Army's support for the White House's activities occur simultaneously with efforts to achieve the Army's objectives,'' said the document.

It said White House officials wanted to move the legislation first ``and use the political momentum of this'' to push through the regulatory change. And it said White House officials believed a regulation was better than trying to move separate legislation on an exemption, ``which is more time-consuming and more visible.''

It added that the Salvation Army, which operates a national network of social services, would enlist more than 100 of its leaders to lobby members of Congress ``in a prearranged agreement with the White House.''

The White House denied on Tuesday that there was any trade-off. ``Oh no, absolutely not,'' said spokesman Ari Fleischer. He said the author of the report misread the administration's position, and ``they've been advised of that.''

The Salvation Army said the report overstated the strategic relationship between the two issues. Spokesman David Fuscus said that passages in the report linking the legislation and the regulation were ``someone's opinion. That was not a strategic plan from the White House.''

But he said the regulation is needed. ``As a church, the Army does insist that those people who have religious responsibilities, who are ministers, share the theology and lifestyle of the church.''