Washington - President Barack Obama is taking the first step toward blocking a nuclear waste dump at Nevada's Yucca Mountain by slashing money for the program in his first budget, according to congressional sources.

    Obama's budget to be announced Thursday will eliminate virtually all funding for the Yucca project with the exception of money needed for license applications submitted last year to the Nuclear Regulatory Commission.

    "The Yucca Mountain program will be scaled back to those costs necessary to answer inquiries from the Nuclear Regulatory Commission while the administration devises a new strategy toward nuclear-waste disposal," the Energy Department will say as part of the budget document, said the sources, who asked not to be identified because the document had not been made public.

    Senate Majority Leader Harry Reid of Nevada, who has fought the Yucca dump for years, said Obama's decision to cut funding "represents our most significant victory to date in our battle to protect Nevada from becoming the country's toxic wasteland."

    The site at Yucca Mountain, 90 miles northwest of Las Vegas, has been under consideration for a quarter-century, although Nevada officials have argued that the volcanic ridge line is not the most suitable place to store 70,000 tons of reactor waste from commercial power plants.

    Obama during his presidential campaign said Yucca Mountain has not been shown to be the best site based on the science, and he promised to review the project.

    Earlier this week, House and Senate Democrats cut Yucca Mountain funding for the remainder of this fiscal year to $288 million, the lowest in recent years. Obama is not expected to provide a specific funding level in his budget, which instead will provide a general outline of spending for the 2010 fiscal year beginning in October.

    By cutting the waste program, said Reid in a statement, Obama has taken "a critical first step toward fulfilling his promise to end the Yucca Mountain project ... President Obama recognizes that the proposed dump threatens the health and safety of Nevadans and millions of Americans."

    Obama is expected to establish a commission to examine alternatives to Yucca Mountain, even as the Nuclear Regulatory Commission continues to consider the license application for the waste repository that was submitted by the Bush administration last year.

    Energy Secretary Steven Chu has said he has no plans to withdraw the license application, a move that could draw lawsuits from the nuclear industry.

    The NRC has up to four years to review the application. The Bush administration had hoped to have the Yucca dump available for waste shipments in 2020.

    In a report to Congress in December, the Bush administration dismissed suggestions that reactor waste be kept at temporary storage sites at government facilities, an option that Obama has suggested. To keep waste in temporary storage Congress would have to change the 1982 nuclear-waste law that cited Yucca Mountain as the only future waste repository.

    Reactor spent fuel is kept in pools and in concrete enclosures at reactor sites.

    The government has estimated the Yucca Mountain project's total costs at $96.2 billion. About $13.5 billion already has been spent.