NEW YORK (AP) _ Hillary Rodham Clinton told gay contributors that her husband's ``don't ask, don't tell'' policy, intended to make it easier for homosexuals to serve in the military, is a failure, The New York Times reported today.

Mrs. Clinton told a private, Manhattan fund-raiser Tuesday that if elected to the U.S. Senate she would work to overturn the policy.

The Times learned of Mrs. Clinton's comments from participants at the fund-raiser sponsored by the Empire State Pride Agenda, which supports equal rights for gays.

The newspaper said her comments were confirmed in a statement from Mrs. Clinton's office but did not specify whether it was her campaign office or White House office. Her campaign spokesman, Howard Wolfson, did not return a phone call this morning from The Associated Press.

``Gays and lesbians already serve with distinction in our nation's armed forces and should not face discrimination,'' Mrs. Clinton said in the statement. ``Fitness to serve should be based on an individual's conduct, not their sexual orientation.''

Although she said she didn't expect Congress to approve such legislation now, Mrs. Clinton said the Pentagon should take steps to reduce the instances of gays being discharged from the military.

It is the second time in recent months that Mrs. Clinton has broken away from a White House policy. In September, she opposed the president's pardon of members of a Puerto Rican terrorist group.

While her position puts her at odds with an administration policy, she is in line with the views of her likely Republican Senate rival, New York Mayor Rudolph Giuliani.

Aides to the mayor say Giuliani supports allowing gays to serve in the military and has been critical of the ``don't ask, don't tell policy'' from the beginning.