TOKYO, DEC. 9 -- The postage stamp controversy that had threatened to reignite lingering World War II resentment on both sides of the Pacific has instead provided a big boost to U.S.-Japanese relations, relieved Japanese officials said today.

The U.S. decision to cancel a planned stamp that depicted the atomic bomb's mushroom cloud, with a caption saying "Atomic bombs hasten war's end, August 1945," has brought widespread praise and gratitude from Japanese leaders -- the same people who angrily denounced the United States just a week ago when the stamp was announced.

"We are grateful for this decision," Prime Minister Tomiichi Murayama said. "And we sincerely respect {the United States} for giving real consideration to the feelings of the people of Japan."

Officials in Nagasaki and Hiroshima, the two cities hit with atomic bombs in August 1945, also expressed gratitude to President Clinton and the United States for responding to Japanese complaints that a mushroom cloud stamp would be insensitive and "heartless."

Hiroshi Harada, director of Hiroshima's atom bomb museum, said the conciliatory step by the United States might make Hiroshima more inclined to cooperate with the Smithsonian Institution and other U.S. organizations planning events to commemorate the 50th anniversary of the end of the war.

The U.S. decision to cancel the stamp received banner headlines in most Japanese newspapers today. Some reports compared the action to the speech President George Bush gave on the 50th anniversary of the Pearl Harbor attack in 1991. Bush said, "I have no rancor toward Japan," a statement that was lavishly praised here as the height of statesmanship.

The mushroom cloud stamp was designed to be one of a set of 10 World War II commemoratives to be issued next year in connection with 50th-anniversary ceremonies. As soon as the bright color painting of the familiar mushroom cloud was unveiled, Japanese responded bitterly to the idea that the victims' suffering would be recalled on a stamp.

"Beneath that mushroom cloud," Nagasaki Mayor Hiyoshi Motoshima said last week, "hundreds of thousands of noncombatant women and children were killed or injured on the spot." It would be "heartless" to issue a stamp featuring this "indiscriminate massacre," Motoshima said.

These protests from Japan fell on receptive ears in the United States. State Department officials, White House officials, Bush and even the Veterans of Foreign Wars said they could understand why Japan believed the atom bomb was not an appropriate image for a stamp.

On Wednesday, Postmaster General Marvin Runyon announced that the mushroom cloud stamp would not be printed. Instead, the commemorative set will include a portrait of President Harry S. Truman announcing the end of the war. Japanese officials said the Truman picture would be appropriate.

U.S. diplomats who have been working with the Japanese on plans for next year's 50th anniversary of the war's end breathed sighs of relief that the stamp problem had been eliminated. "The Post Office never asked us before they put out the {mushroom cloud} stamp, and as soon as we saw it we knew the Japanese would be horrified," said one diplomat working on relations with Japan.

The news of the stamp prompted bitter critiques from political leaders, pundits and people on the street. The reaction reflects Japan's extremely sensitive view of its relations with the United States, this country's biggest market, strongest ally and chief role model in the world. The normal sensitivities are heightened even further when the issue of World War II comes up.

During the past week, for example, all the Japanese media engaged in detailed analyses of each of the commemorative World War II stamps issued in the United States over the past four years. Although the Postal Service has tried carefully to balance the collection between the Atlantic and Pacific theaters of the war, the Japanese analysts concluded the stamps are unbalanced, to Japan's disfavor.

One stamp in the set shows the attack on Pearl Harbor on Dec. 7, 1941. Another shows the U.S. Navy destroyer Reuben James being sunk. This pair of stamps was reported here to be proof of bias against Japan -- because the Pearl Harbor stamp includes the caption "Japanese attack Pearl Harbor," but the USS Reuben James stamp does not mention that Germans sank that destroyer.