Sept. 23 (Bloomberg) -- A 26-year ban on offshore oil drilling will be dropped as part of a year-end spending bill, said House Appropriations Committee Chairman David Obey.

Eliminating the ban will allow the measure, which funds government operations through March 6, to get through Congress and be signed into law by President George W. Bush, Obey said.

``At least temporarily, the moratorium is lifted,'' Obey told reporters. ``This next election will decide what our drilling policy is going to be.''

The announcement was hailed by Republicans. ``House Republicans have fought for months to lift these outdated bans on American energy production, and the capitulation by Democrats today is a big victory for working families, seniors, and small businesses struggling with record gasoline prices,'' said House Republican Leader John Boehner, of Ohio.

The legislation, slated for a House vote tomorrow, will also include a $25 billion loan package for the auto industry, $23 billion in disaster assistance, an additional $2 billion for Pell education grants along with the annual defense, homeland security and veterans' affairs appropriations bills.

Most of the rest of the government will remain at current funding levels, he said. Obey said lawmakers will revisit those agencies' budgets after the election. Proposals to expand unemployment assistance and food stamps will be considered separately as part of a stimulus bill, he said.

End the Ban

The bill would end a months-long fight over the drilling moratorium. The push to end the ban picked up in July as the price of oil hit a record $147.27 per barrel and the average pump price of gasoline topped out at $4.11 per gallon. Presidential candidates Barack Obama and John McCain both altered their positions on the matter, saying they would support new offshore drilling.

About 17.8 billion barrels, or just over two years worth of U.S. consumption and 76 trillion cubic feet of natural gas were off-limits to drilling as a result of congressional and presidential moratoria, according to the Minerals Management Service, an agency of the U.S. Interior Department.

Bush lifted a separate presidential moratorium on offshore drilling, leaving only the congressional ban in place.

Obey, a Wisconsin Democrat, declined to discuss the specifics of the bill's auto-loan provisions saying his colleagues are ``still arguing about where the commas go.'' He said lawmakers didn't agree to sweeping changes in the program that had been sought by industry advocates.

24 Hours

The plan outlined by Obey would give Republicans less than 24 hours to scrutinize legislation spending more than $600 billion on the defense, homeland security and veterans' affairs agencies including thousands of pet projects known as earmarks.

Asked if the process of has been secretive, Obey said: ``You're damn right it has because if it's done in the public it would never get done.'' He said he wanted to avoid his colleagues' ``pontificating'' on the content of the legislation, saying ``that's what politicians do when this stuff is done in full view of the press.'' He said ``we've done this the old fashioned way by brokering agreements in order to get things done and I make no apology for it.''

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net.

Last Updated: September 23, 2008 20:49 EDT