WASHINGTON, D.C. — President Clinton has enacted a law that Jewish groups have long championed as a means of denying Iran and Libya revenue that could be used to finance terrorism.

The legislation, signed last week, will impose sanctions against foreign companies that invest in oil and gas projects in Iran or Libya. The law presents the international community with a simple directive: Choose between doing business with Iran and Libya or the United States.

Washington considers Iran and Libya to be leading sponsors of international terrorism, and proponents of the sanctions hope that the resulting cash squeeze will inhibit their ability to finance terrorism and develop weapons of mass destruction.

Under the threat of sanctions, at least four European companies have already backed away from planned deals with Iran worth about $10 billion.

But the European Union protested the law, with some countries threatening action against it.

The law requires the president to impose at least two of six possible sanctions on a company that makes future investments of $40 million or more in developing oil and gas resources in Iran or Libya. It also sanctions firms that violate existing United Nations sanctions against Libya.

Clinton said the move against Libya would intensify pressure on Tripoli to extradite the suspects in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.

The American Israel Public Affairs Committee applauded Clinton and Congress for enacting the law, calling it "one of the most critical steps in arresting the nuclear and terrorism threats to the U.S. and its allies."

The Conference of Presidents of Major American Jewish Organizations welcomed the move as a sign of "America's determination to wage war against terrorism and those who support it."

After signing the legislation to further isolate the two outcast nations, Clinton delivered a major foreign policy address at George Washington University. He called terrorism the "enemy of our generation" and said that fighting such acts was a national security priority.

To that end, Clinton called for greater international cooperation against terrorism, stricter law enforcement measures and tighter security at airports.

He said he intends to submit new legislation on countering international crime when Congress returns after its August recess. The legislation would target money laundering, strengthen extradition powers and border controls, and increase the ability of American law enforcement to prosecute those who commit violent crimes against Americans abroad.

The Anti-Defamation League, a leading proponent of stiff anti-terrorism measures, welcomed Clinton's remarks.

In a letter to Clinton, ADL national chairman David Strassler and national director Abraham Foxman wrote, "We applaud your ongoing leadership and your action today to convey the seriousness with which the U.S. views the threat of terrorism and its readiness to urge our allies to join our efforts."

The ADL also joined Clinton in criticizing Congress for failing to act swiftly to adopt new anti-terrorism measures in the wake of the bombing last month at Atlanta's Centennial Olympic Park.

House Republicans have reached an agreement on an anti-terrorism bill that falls short of what the Clinton administration and Jewish groups had sought.

The House scrapped Clinton's proposals for expanded wiretapping authority for the FBI and a requirement that chemical markers be put in explosive powders, making terrorist bombs easier to trace.

The Senate did not act on the bill before it recessed; lawmakers are expected to come back to the measure when they return next month.

Meanwhile, Congress approved funding two weeks ago for the FBI to open offices in four cities, including Tel Aviv and Cairo.