In a campaign already strongly emphasizing faith, Democratic presidential contender Barack Obama announced his intent to make federal funding of religiously based organizations a key part of his push to help the needy.

His plan would overhaul and expand the controversial faith-based initiative that was an early cornerstone of President Bush's domestic program, which Senator Obama said had "never fulfilled its promise."

Obama's proposals, announced Tuesday, are likely to appeal particularly to African- Americans, who already lean Democratic, and to Evangelicals of various political stripes who are increasingly concerned about issues of poverty. He has stepped up his religious outreach in recent weeks, including seeking inroads into the Republicans' Evangelical base. But his proposals also run the risk of alienating Democrats opposed to funding religious groups for any purpose.

Obama said America's problems were too big to solve through government alone. "I believe that change comes not from the top down but from the bottom up, and few are closer to the people than our churches, synagogues, temples, and mosques," he said, during a visit to Eastside Community Ministry in Zanesville, Ohio.

The senator was careful to highlight key areas of difference between that initiative and his own proposal for a Council for Faith-Based and Neighborhood Partnerships.

"Make no mistake, as someone who used to teach constitutional law, I believe deeply in the separation of church and state, but I don't believe this partnership will endanger that idea," Obama said.

He emphasized that those receiving funds could not proselytize the people they help nor could they discriminate in hiring practices on the basis of religion. Faith-based groups could only use federal dollars for secular programs. And he committed to ensure that taxpayer dollars would only go to "programs that actually work."

These "guiding principles" were aimed at defusing criticisms surely to come from many in the Democratic camp as well as watchdog groups, which have won some court cases where faith-based groups were found using dollars for religious purposes.

"Proselytizing and discrimination in hiring have been two of the big problems with the president's program," says the Rev. Barry Lynn, executive director of Americans United for the Separation of Church and State. "The devil is in the details on whether the Obama plan would fully correct those, but he's moving in the right direction.

"The unfortunate thing is that the idea of giving religious bodies government funding is easily a formula for misuse and politicizing. We've seen that in the last seven years," Mr. Lynn adds.

Religious groups hiring only those of their faith to operate federally funded programs remains a key issue, which Obama's campaign needs to clarify further, says Marc Stern, a lawyer for the American Jewish Congress.

"You can't mention the Salvation Army and Catholic Charities as models of what's appropriate [as Obama did], and then say you can't engage in religious discrimination in employment, because both of those organizations do discriminate," Mr. Stern says.

For some religious groups, hiring people who share their mission is as critical, they say, as it is for political campaigns or other types of nonprofits. Obama's stance could present challenges for his bid to woo Evangelicals away from the Republican Party, an effort that has included a lengthy meeting with national religious leaders and an outreach program to young Christians.

At the same time, two former White House officials responsible for the Bush initiative have responded positively to the Obama proposal. John DiIulio, the first director of the White House Office for Faith-Based and Community Initiatives, says Obama has offered a "principled and problem-solving vision."

David Kuo, who left the White House disillusioned over its implementation of the faith-based effort, says, "They've clearly taken a very close look at the failures of the Bush administration's effort and have made a systematic attempt to address them." But Mr. Kuo, who is now Washington editor for Beliefnet.com, cautions that there have been lots of promises in the past, and "the test will be whether he has the commitment to fulfill the promise."

The Obama plan would create a new President's Council for Faith-Based and Neighborhood Partnerships in the White House and retain the offices in various federal agencies that oversee grants to faith-based and other community groups. The council would launch a training effort – by which larger charities trained smaller local organizations – and also hold grant recipients accountable by conducting rigorous performance evaluations.

His plan also envisions a $500 million per year summer learning program to focus efforts on closing the education achievement gap of poor and minority students. He aims to serve a million children in the effort.

Obama began his career as a community organizer on the South Side of Chicago working with church groups to improve living conditions in poor neighborhoods. In his view, the Bush program was consistently underfunded and promoted partisan interests.

Others have charged that the program simply shifted grants to other recipients within a shrinking pie of funds. In 2006, a study by the Roundtable on Religion and Social Policy reviewed some 28,000 social service grants made by nine federal agencies from 2002 to 2004. While faith groups' share of grants awarded rose from 11.6 percent in 2002 to 12.8 percent in 2004, the total amount of the grants dropped from $670 million to $626 million. Total funds available from the programs during that period dropped by more than $230 million.

In his speech July 1, Obama emphasized that leaders in both parties have recognized the beneficial role that faith groups can play. Polls have also shown that two-thirds of Americans support the idea in principle but many have concerns about how it is implemented.