Washington - The Department of Homeland Security will proceed with the first phase of a controversial satellite-surveillance program, even though an independent review found the department hasn't yet ensured the program will comply with privacy laws.

    Congress provided partial funding for the program in a little-debated $634 billion spending measure that will fund the government until early March. For the past year, the Bush administration had been fighting Democratic lawmakers over the spy program, known as the National Applications Office.

    The program is designed to provide federal, state and local officials with extensive access to spy-satellite imagery -- but no eavesdropping -- to assist with emergency response and other domestic-security needs, such as identifying where ports or border areas are vulnerable to terrorism.

    Since the department proposed the program a year ago, several Democratic lawmakers have said that turning the spy lens on America could violate Americans' privacy and civil liberties unless adequate safeguards were required.

    A new 60-page Government Accountability Office report said the department "lacks assurance that NAO operations will comply with applicable laws and privacy and civil liberties standards," according to a person familiar with the document. The report, which is unclassified but considered sensitive, hasn't been publicly released, but was described and quoted by several people who have read it.

    The report cites gaps in privacy safeguards. The department, it found, lacks controls to prevent improper use of domestic-intelligence data by other agencies and provided insufficient assurance that requests for classified information will be fully reviewed to ensure it can be legally provided.

    A senior homeland-security official took issue with the GAO's broad conclusion, saying the department has worked hard to include many layers of privacy protection. Program activities have "an unprecedented amount of legal review," he said, adding that the GAO is seeking a level of proof that can't be demonstrated until the program is launched.

    Homeland Security spokeswoman Laura Keehner said department officials concluded that the program "complies with all existing laws" because the GAO report didn't say the program doesn't.

    Addressing the gaps the agency cited, Ms. Keehner said current laws already govern the use of intelligence data and the department has an additional procedure to monitor its use. The department will also work with other intelligence agencies to "ensure that legal reviews and protection of classified information will be effective," she said.

    In response to the GAO report, House Homeland Security Committee Chairman Bennie G. Thompson of Mississippi and other Democrats asked Congress to freeze the money for the program until after the November election so the next administration could examine it.

    But the bill Congress approved, which President George W. Bush signed into law Tuesday, allows the department to launch a limited version, focused only on emergency response and scientific needs. The department must meet additional requirements before it can expand operations to include homeland-security and law-enforcement surveillance.

    The restrictions were "the most we could have required without a complete prohibition," said Darek Newby, an aide to Democratic Rep. David Price of North Carolina, who heads the House homeland-security spending panel.

    But California Rep. Jane Harman, who heads a homeland-security subcommittee on intelligence, said that even limited funding allows the department to launch the program, providing a platform to expand its surveillance whether or not privacy requirements are met.

    "Having learned my lesson" with the National Security Agency's warrantless-surveillance program, she said, "I don't want to go there again unless and until the legal framework for the entire program is entirely spelled out."

    Rep. Thompson vowed to fight expansion of the program until privacy issues are further addressed.