Washington ? In a concession, Senate Democrats agreed Tuesday to jettison a $50 billion fund that Republicans attacked repeatedly as a perpetual Wall Street bailout-in-waiting, according to officials in both parties, clearing one of the key obstacles to approval of tougher federal controls over the financial industry.

While a formal announcement was held up pending a review by key lawmakers and the Obama administration, the emerging agreement was designed to assure that any future taxpayer costs arising from the liquidation of big firms in the future would be temporary and on a case-by-case basis.

The agreement marked a retreat by Democrats, who had protested bitterly in recent days that Republicans were inaccurate with claims that the multi-billion-dollar fund would serve as a source for future bailouts.

President Barack Obama has made an election-year priority of congressional passage of legislation to prevent future economic calamities like the one that plunged the country into a deep recession 18 months ago.

Opinion polls suggest strong support for additional federal regulations, even though numerous surveys also report high levels of public distrust of government’s abilities to solve problems.

Obama, speaking to a business organization, said there would be “legitimate differences on the details of what is a complicated piece of legislation” in the coming days.

At the same time, he said, “We cannot allow these reforms to be watered down. And for those of you in the financial industry whose companies may be employing lobbyists seeking to weaken this bill, I want to urge you, as I said on Wall Street a couple of weeks ago, to join us rather than to fight us.”

The tentative compromise was struck by Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., the parties’ two seniors members of the Senate Banking Committee.

While the fund would be gone, taxpayers could wind up fronting billions of dollars to help cover the costs of taking down a failed firm, money that would take the forms of loans from the Treasury to the Federal Deposit Insurance Corp.

Additionally, the Treasury would be required to recover those costs over time from the sale of a firm’s assets and from its creditors. As a last resort if not enough money could be raised, the government would assess a fee on other large financial institutions.