WASHINGTON (AP) _ The Clinton administration, which found much appeal in the idea of letting a commission do the dirty work of slashing cost-of-living benefits for 60 million Americans, is backing away. Organized labor and senior citizens put up intense opposition.

However, supporters insisted Thursday that reducing the Consumer Price Index to produce billions of dollars in budget savings is not dead even though President Clinton has abandoned the use of a commission to pick the precise adjustment figure.

``If you want to balance the budget by 2002, you can't get there from here without an adjustment in the CPI,'' said Rep. Charles Stenholm, D-Texas.

Stenholm is a member of the ``Blue Dogs,'' conservative House Democrats who are pushing a budget that features a 0.8 percentage point cut in the CPI annually to achieve $103 billion in savings over five years.

Supporters of a reduced CPI in the House and Senate urged Clinton to keep an open mind on overhauling the inflation gauge even if he doesn't use a commission.

``One-third of the federal budget is indexed right now to a formula that is incorrect and inaccurate,'' said Sen. John Breaux, D-La. ``We would say to the White House _ there is bipartisan support for this. Don't give up the effort.''

The White House conducted two weeks of intensive behind-the-scenes discussions, led by White House chief of staff Erskine Bowles, in an effort to win support for the commission approach. The idea was publicly endorsed by Senate Majority Leader Trent Lott and Federal Reserve Chairman Alan Greenspan.

But in the end, White House officials said, Clinton grew reluctant because of fierce opposition from organized labor and senior-citizen groups.

Presidential spokesman Michael McCurry stressed to reporters Thursday that the issue of adjusting the CPI to remove any exaggeration was ``not going to go away.''

House Speaker Newt Gingrich had declined to join Lott, the Senate Republican leader, in embracing the commission approach, fearful that Republicans would be attacked in 1998 for trying to cut Social Security, as they were attacked last year for trying to cut Medicare.

Gingrich also faced a revolt from fervent anti-tax Republicans who view any cut in the CPI as a backdoor tax increase, since the CPI is used to adjust tax brackets, personal exemptions and standard deductions.

At one point, according to congressional sources who spoke on condition of anonymity, Gingrich asked administration officials whether they could replace Katharine Abraham, head of the Bureau of Labor Statistics, with someone more willing to make changes to the CPI. Abraham, however, serves a fixed four-year term that does not expire until October.

At another point, according to several sources, the White House floated a proposal with organized labor that would have created a split system, one for the private sector and one for government programs. But at a White House meeting last week, AFL-CIO President John Sweeney rejected this idea.

David Certner, a lobbyist for the American Association of Retired Persons, said his group adamantly opposes any CPI adjustments made by anyone outside the BLS.

One such effort was promoted Thursday by leaders of the Senate Finance Committee _ the chairman, Sen. William Roth, R-Del., and the senior Democrat,

Sen. Daniel Patrick Moynihan of New York.

Their legislation would create a five-member board, appointed by the president and confirmed by the Senate, to calculate the CPI each year for purposes of setting cost-of-living increases and adjusting the tax system.