Several other officials said Republicans have begun discussing a possible replacement.

One name that consistently comes up is Ted Olson, former solicitor general. Olson is seen as having the experience, reputation and credibility needed to steer the department for the next year and a half, through the end of Bush's term.

Underlying the dispute is the role Mr. Olson played, along with his wife, Barbara, during the Clinton presidency, when both engaged in harsh, even vituperative criticism of both President Bill Clinton and his wife, Hillary Rodham Clinton. Mr. Olson has never denied being a leading figure in anti-Clinton circles, but the dispute has involved his connection to a specific venture at The American Spectator known as the Arkansas Project.

The Arkansas Project was a venture at the magazine for which Richard Mellon Scaife donated $2.4 million to pay for negative research about the Clintons' behavior in Arkansas. In sworn testimony before the committee, Mr. Olson has unequivocally denied knowledge of the project from 1994 into 1997.

''I was not involved in the origin, management or supervision of the Arkansas Project,'' Mr. Olson testified under oath and repeated in written answers to the Judiciary Committee. Although he was involved in some of the negative Clinton articles at the magazine and even wrote some himself, he sought to make a distinction between those activities and those directly related to the Scaife-financed Arkansas Project.

The first meeting of the Arkansas Project took place in 1994 at Olson's Washington law office and was attended by Olson, Stephen Boynton, Dave Henderson and others from the American Spectator and other Scaife-funded organizations, according to reporting by Jonathan Broder and Joe Conason. In a subsequent article about the extravagant, "tax-exempt" lifestyle of American Spectator editor R. Emmett Tyrrell, a third of whose $598,000 McLean, Va., home was owned by the nonprofit foundation that publishes the magazine, Salon obtained documents outlining "frequent visitors to Bob's home/office for business purposes" and "dinners and meetings at RET's home" in 1996 and 1997. Theodore Olson was among those "frequent visitors" -- a list of whom reads like a who's who of anti-Clinton journalists.

As reported by Salon's Jake Tapper, Olson amended his response in a letter he sent to Leahy last week: "I do recall meetings, which I now realize must have been in the summer of 1997 in my office regarding allegations regarding what became known as the 'Arkansas Project.'" Olson elaborates in the letter that he was the American Spectator's attorney during the same period of time that the Arkansas Project took place. Olson also confirms that he did, in fact, convene a meeting about the Arkansas Project in his office prior to 1998. Of the 1994 meeting, he writes, "I do not recall the meeting described." Olson adds, "I certainly was not involved in any such meeting at which a topic was using Scaife funds and the American Spectator to 'mount a series of probes into the Clintons and their alleged crimes in Arkansas.'"