WASHINGTON (Reuters) - Corporations can spend freely to support or oppose candidates for president and Congress, the Supreme Court ruled on Thursday, a landmark decision denounced by President Barack Obama for giving special interests more power.

Supreme Court Justices gather for an official picture at the Supreme Court, September 29, 2009. REUTERS/Jim Young

“The Supreme Court has given a green light to a new stampede of special interest money in our politics,” Obama said after the 5-4 ruling that divided the nation’s high court along conservative and liberal lines.

“It is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans,” Obama said.

Obama said he instructed administration officials “to get to work immediately with Congress on this issue” and “talk with bipartisan congressional leaders to develop a forceful response to this decision.”

The ruling, a defeat for Obama and supporters of campaign finance limits, is expected to unleash a flood of money to be spent in this year’s congressional election and the 2012 presidential contest.

Writing for the majority, Justice Anthony Kennedy said the long-standing campaign finance limits violated constitutional free-speech rights of corporations.

“The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether,” he wrote.

The four liberal dissenters said allowing corporate money to flood the political marketplace will corrupt democracy.

RULING COULD UNDERMINE INTEGRITY-DISSENT

In his sharply worded dissent, Justice John Paul Stevens wrote, “The court’s ruling threatens to undermine the integrity of elected institutions across the nation.”

The justices overturned Supreme Court precedents from 2003 and 1990 that upheld federal and state limits on independent expenditures by corporate treasuries to support or oppose candidates.

In the 2008 election cycle, nearly $6 billion was spent on all federal campaigns, including more than $1 billion from corporate political action committees, trade associations, executives and lobbyists.

The ruling will almost certainly allow labor unions to spend more freely in political campaigns also and it posed a threat to similar limits that had been imposed in about half of the country’s 50 states.

The top court struck down the part of the federal law that restricted broadcast advertisements for or against political candidates right before elections that are paid for by corporations, labor unions and advocacy groups.

The 2002 campaign finance law at issue was named after Senator John McCain, the unsuccessful Republican presidential nominee in 2008, and Democratic Senator Russell Feingold.

Republican Party Chairman Michael Steele praised the ruling and said, “Free speech strengths our democracy.”

Senate Republican Leader Mitch McConnell, long an opponent of the law, said, “For too long, some in this country have been deprived of full participation in the political process.”

But the law’s supporters said the ruling will allow corporations to spend unlimited sums to influence elections.

“The bottom line is, the Supreme Court has just predetermined the winners of next November’s election. It won’t be the Republican or the Democrats and it won’t be the American people; it will be corporate America,” Senator Charles Schumer, a Democrat from New York, said.

The decision was a victory for a conservative advocacy group’s challenge to the campaign finance law as part of its efforts to broadcast and promote a 2008 movie critical of then-presidential candidate Hillary Clinton. She later became Obama’s secretary of state.

The Obama administration defended the law’s restrictions on election-related spending by corporations, unions and interest groups.

The court’s conservative majority, with the addition of Chief Justice John Roberts and Justice Samuel Alito, both appointees of then-President George W. Bush, in the ruling made a dramatic change in the campaign finance law designed to regulate the role of money in politics and prevent corruption.