Thousands of Iraqis whose support for the U.S. war effort in Iraq has put them and their families in grave danger at home are being excluded from a new fast-track system aimed at speeding up refugee resettlement in the United States for American allies, officials said Thursday. The Bush administration within the next month will begin accepting refugee applications directly from the about 100 Iraqi employees of the U.S. Embassy in Baghdad and their relatives, letting them bypass an often-lengthy U.N. referral process in third countries where they must travel at great expense, they said. But possibly tens of thousands more at-risk Iraqis - those who worked for private contractors, aid agencies or media outlets and their relatives - won't be eligible due to objections from the Homeland Security Department, which fears that terrorists might use it to slip into the country, the officials said. Homeland Security is effectively blocking contract employees, like drivers, translators, technicians, from benefiting from the initiative by insisting they provide official U.S. references and sponsors before applying for resettlement, a more stringent standard than for direct hires and even those in the U.N. system, according to the officials. Meeting that higher bar will be almost impossible for many whose work for private U.S. employers in Iraq ended months or years ago, the officials said. The officials spoke on condition of anonymity to describe internal deliberations between Homeland Security, which must vet all would-be Iraqi refugees, and the State Department, which wants to widen resettlement opportunities for Iraqi refugees. The two agencies have been unable to reach a compromise and the issue has been referred to the National Security Council, although the matter may be resolved before that happens through legislation pending in Congress. That legislation would include Iraqi contract employees in the so-called P2 refugee category. Those in that category are considered to be members of groups of "special humanitarian concern" to the United States and have the right to apply for resettlement in the United States directly instead of having to seek help from the U.N. High Commissioner for Refugees. The State Department's position is that security safeguards are already built into Homeland Security's own vetting process and that expanding the P2 category does not guarantee any applicant entry to the United States as a refugee, only the chance to apply directly. Lori Scialabba , a top immigration lawyer at Homeland Security, acknowledged the disagreements but expressed hope that they could be resolved. "I'm sure State would say that they're just as concerned with security as we are, and we're just as concerned with assisting this group of people as State is," she said. "We're working things out." Scialabba and James Foley, a career diplomat and former ambassador, were appointed by Secretary of State Condoleezza Rice and Homeland Security Secretary Michael Chertoff to improve coordination between the agencies. Foley declined to comment on the dispute. The Bush administration has set a goal of admitting 12,000 Iraqi refugees in the current budget year that ends next October. That would be a more than sevenfold increase in the 1,608 admitted in fiscal year 2007 . Last month - the first of the new budget year - only 450 Iraqis were allowed in, less than half the monthly average of 1,000 needed to reach the target. Scialabba and Foley briefed reporters Thursday on the administration's broader effort to boost the slow pace of Iraqi admissions, which has been heavily criticized by some in Congress and refugee advocacy groups. More than 2 million Iraqis have fled their country since the war began, most of them to neighboring countries and of those about 13,000 have been referred to the United States for resettlement through the U.N. process About 1.4 million of the refugees are in Syria, 750,000 in Jordan, 100,000 in Egypt, 54,000 in Iran, 40,000 in Lebanon, 10,000 in Turkey and 200,000 in various Persian Gulf countries, according to the U.N. High Commissioner for Refugees. Some who fled to Syria have recently begun to return to Iraq but the numbers are unclear. The U.S. admissions process had been badly hampered by the refusal since May of Syria to grant visas to U.S. interviewers to screen potential refugees. But on a visit to Damascus last month, Foley and Scialabba won approval for the process to restart, and Homeland Security officials are currently in Syria interviewing U.N. refugee referrals //By MATTHEW LEE, Associated Press Writer .