WASHINGTON — Flinching in the face of a veto threat, Democratic congressional leaders neared agreement with Bush administration yesterday on legislation to pay for the Iraq war without a troop withdrawal timeline.

Several officials said the emerging $120 billion compromise would include as much as $8 billion for Democratic domestic priorities — originally resisted by the White House — such as disaster relief for Hurricane Katrina victims and farmers hurt by drought.

After a bruising veto struggle in which President Bush vetoed one Democratic-drafted measure and threatened to reject another, congressional leaders in both political parties said they hoped the compromise would be cleared for Mr. Bush’s signature by Friday.

In power less than five months, Democrats coupled their war-related concession with a vow to challenge Mr. Bush’s policies anew, and quickly.

“We’re going to continue our battle, and that’s what it is, to represent the American people like they want us to represent them, to change the course of the war in Iraq,” Majority Leader Reid of Nevada said.

Lawmakers in both parties claimed victory in legislation that contained no binding limitation on Mr. Bush’s powers as commander in chief.

“I view this as the beginning of the end of the president’s policy on Iraq in this war,” Rep. Rahm Emanuel, a Democrat of Illinois, said. “It ends the blank check of more troops, more money, more time, and more of the same. And it begins the notion that we have to have a new direction to Iraq that has accountability, standards that you can measure progress and not.”

Messrs. Emanuel and Reid and other Democrats pointed to a provision setting standards for the Iraqi government to meet in developing a more democratic society. American reconstruction aid would be conditioned on progress toward meeting the goals, but Mr. Bush would have authority to order the money to be spent regardless of how the government in Baghdad performed.

And despite the Democratic claims of success, Speaker Nancy Pelosi told reporters she is unlikely to vote for the war money because it lacks “a goal or a timetable” for a troop withdrawal.

Republicans said that after weeks of struggle, they had forced Democrats to drop their demand for a troop withdrawal timetable.

Rep. John Boehner of Ohio, the House Republican leader, said: “Democrats have finally conceded defeat in their effort to include mandatory surrender dates in a funding bill for the troops, so forward progress has been made for the first time in this four-month process.”

But Republicans agreed to concessions, as well, in terms of billions of dollars in domestic spending that Democrats wrung from them and the administration. Republican leaders had hoped to persuade the White House to make a tougher stand against the Democratic demands, but it appeared that they were undercut by the desire of the GOP rank and file for money for farmers and others.

Final details of the measure remained in flux, although Rep. David Obey, a Democrat of Wisconsin, chairman of the House Appropriations Committee, said at an early evening news conference, “we’re very close to having things tied down.”

In all, officials said the measure included about $17 billion more than Mr. Bush initially requested. Of the $17 billion, about $9 billion would go for defense-related items and veterans’ health care.