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The government must approve any such transaction because of sanctions against Libya. Farrakhan, who was widely criticized earlier this year for visiting Libya and other states that support terrorism, asked for an exemption, saying the money would go to help U.S. blacks.

In a letter to Farrakhan's legal representatives, the Treasury Department said it rejected the request because of longstanding grievances with the Libyan regime and because U.S. law prohibited accepting it.

The Nation of Islam pledged to fight the ruling in court, declaring in a statement, "It is an action taken in callous disregard of the needs and hopes of black people, at a time when their needs are dire and their hopes under assault."

Abraham Foxman, national director of the Anti-Defamation League, said, "We're pleased the Treasury Department has demonstrated its resolve against terrorist states and their supporters by rejecting Minister Farrakhan's request."

Foxman and ADL National Chairman David Strassler sent a letter last week to Treasury Secretary Robert Rubin urging the Clinton administration to deny Farrakhan's request in accordance with the sanctions against Libya and with the U.S. anti-terrorism law passed this year.

The law makes it a criminal offense for U.S. citizens to engage in financial transactions with governments designated as supporters of international terrorism.

"Allowing this transfer would undermine U.S. anti-terrorism policy and facilitate Libya's efforts to circumvent U.S. law," the ADL officials wrote.

Phil Baum, executive director of the American Jewish Congress, said, "It is imperative we make it plain that we will not allow terrorist states to use their abundant dollars to buy support in this country for their outrages against decency.

"We can only regret that there are U.S. citizens of any persuasion and belief who might be willing to sell themselves for this purpose."

Rep. Peter King (R-N.Y.), one of Farrakhan's most outspoken critics, said the Treasury Department "did the right thing" in refusing Farrakhan's application.

In letters to Secretary of State Warren Christopher and Attorney General Janet Reno, King called on the administration to go further by freezing Farrakhan's bank accounts, forcing Farrakhan to surrender his passport when he returns to the United States and launching an investigation to explore criminal prosecution of Farrakhan.

"Farrakhan by himself is a hateful racist whose words and actions are a disgrace to everything for which this nation stands," King said in a statement.

"Farrakhan, to-gether with the moral and financial backing of Moammar Khadafy and other tyrants of terror, is nothing less than a threat to our national security."

The Treasury Department's decision came as Farrakhan arrived in Tripoli last week to receive a $250,000 humanitarian award from Khadafy. That amount is in addition to the $1 billion Khadafy pledged in February.

The Treasury Department said Farrakhan also would not be allowed to claim the $250,000.

Before leaving for Libya last week, Farrakhan said at a news conference in Chicago that if the federal government does not allow him to accept the money, "I will go across the nation stirring up not only my own people, but all those who would benefit from it.

"We are not terrorists," Farrakhan said. "We are not trying to do anything against the good of America. What we want to do is good for our people and ultimately good for our nation."

Farrakhan has said he would use the money for voter registration drives, charitable contributions and economic development opportunities for black people.

In Tripoli, Farrakhan praised Khadafy as "one who would not only use the wealth of Libya to improve the lot of Libya's people but also to improve the quality of life throughout the world."

During Farrakhan's visit in February to Libya, JANA, the official Libyan news agency, quoted Khadafy as saying that American blacks should set up their own state within the United States and form the largest black army in the world.

"Our confrontation with America used to be like confronting a fortress from outside," Khadafy was quoted as saying. "Today, we have found a loophole to enter the fortress and to confront it from within."