June 23 (Bloomberg) -- The U.S. Supreme Court approved race- conscious college admissions, reaffirming a 25-year-old precedent and ensuring that hundreds of top universities can continue using affirmative action to bolster black and Hispanic enrolment.

A divided court upheld an affirmative action program at the University of Michigan's law school while striking down a separate undergraduate policy. The decision was a rebuff to the Bush administration, which had called both programs a ``quota.''

``The law school's educational judgment that such diversity is essential to its educational mission is one to which we defer,'' Justice Sandra Day O'Connor said for a 5-4 majority. A separate 6-3 majority said the undergraduate policy was too broad, failing the constitutional test of ``narrow tailoring.''

The decisions ensure that public and private universities can continue to use race as a factor in admissions, something almost all selective schools do. Proponents had said a ban on race-based admissions would slash the number of minorities in top universities.

``This may dramatically reduce the threat that American higher education would be re-segregated at its highest levels,'' said Douglas Laycock, a professor at the University of Texas Law School.

The case was the Supreme Court's first look at race-based admissions since its 1978 Bakke decision, which gave a limited endorsement to affirmative action in a case about a University of California medical school.

Three Rejected Applicants

Justices Stephen G. Breyer, David H. Souter, Ruth Bader Ginsburg and John Paul Stevens joined O'Connor's majority opinion in the law school case. O'Connor and Breyer switched sides in the undergraduate fight, joining Chief Justice William H. Rehnquist and Justices Antonin Scalia, Clarence Thomas and Anthony M. Kennedy in striking down that program.

Three rejected white applicants argued that the policies violated the U.S. Constitution's equal protection guarantee.

General Motors Corp. and 65 other Fortune 500 companies supported the university, saying racially integrated colleges help them recruit a diverse workforce.

The university also drew support at the court from two-dozen former military leaders who said race-conscious admissions help ensure a diverse officer corps.

Michigan argued that minority students help foster a diversity of viewpoints on campus. So-called underrepresented minorities -- blacks, Hispanics and American Indians -- represent 13.6 percent of Michigan's undergraduate students and 12.5 percent of its law students.

`Critical Mass'

Michigan's undergraduate policy rated applicants on a 150- point scale and automatically gives 20 points to minorities. The law school considers race in a less rigid manner as part of a review of an applicant's entire file.

The school's goal under both policies was to enroll a ``critical mass'' of minority students -- enough to ensure they can contribute to discussions without feeling isolated.

A federal appeals court upheld the law school policy. That court also heard arguments in the undergraduate case, yet never ruled.

The cases are Grutter v. Bollinger, 02-241, and Gratz v. Bollinger, 02-516.

Last Updated: June 23, 2003 11:08 EDT