ASHINGTON, April 25 — The Bush administration is preparing to allow the coal mining industry to fill waterways and valleys with the rock and dirt from mountaintop mining, particularly in West Virginia.

But a proposal being circulated excludes trash, used tires, junked cars and discarded kitchen appliances as fill in waterways unless they are part of a structure, like artificial reefs or berms. The rule, which officials said was still being fine-tuned, is expected to be made final within two months.

Mining officials said that they sought the new regulation because too much confusion existed without it, and that being allowed to fill water and valleys with the so-called overburden from mines would let them produce electricity more cheaply. The practice has been used since the 1970's, with permits from the Army Corps of Engineers.

Environmentalists oppose the regulation, saying that filling streams and valleys destroys the ecosystem of the waterways and forests, ruins the land for nearby communities and is a serious rollback of the Clean Water Act.

Greg Peck, deputy director of the wetlands division of the Environmental Protection Agency, said that the agency was reviewing the economic benefits versus the environmental threats of the practice. In the meantime, Mr. Peck said, the agency wants to reconcile the different definitions of "fill" used by the agency and the Army Corps of Engineers without disrupting the status quo.

In the last three years, the corps has approved 75 permits for companies in West Virginia and 108 in Kentucky to fill valleys and streams with mine waste.

The administration has not announced the decision but circulated the proposal, with the final rule to be issued by Christie Whitman, the administrator of the Environmental Protection Agency, probably in the next couple of months, officials said. The proposal mirrors one offered by the Clinton administration but abandoned after protests from environmentalists.

"It is not a giveaway to the mining industry," Ms. Whitman has said. "It does not allow activity that isn't already under way."

The environmental agency's proposal casts the decision as largely a technical matter that will not significantly alter current practice. Environmentalists agree that it would not alter current practice but say the Corps of Engineers' practice of issuing permits to mining companies to fill the valleys and waters is illegal. They have challenged it in federal court.

The environmentalists say that the permitting process is not a minor matter but one that has already erased more than 1,000 miles of streams in Appalachia because of extensive mountaintop mining, the practice of shearing off the tops of mountains to extract coal from thin seams.

"These are the changes that the mining industry wanted," said Daniel Rosenberg, a lawyer with the Natural Resources Defense Council. "They'll be allowed to dump more waste and more types of waste."

Carol Raulston, a spokeswoman for the National Mining Association, said the permits required careful construction of the fills, with drainage, so they did not disrupt aquatic life.

She said that the low-sulfur coal from these mines would go to utilities that provide electricity to about one million homes in West Virginia and that the proposal would allow the flow of power to continue. She said that 19 percent of the coal mined in West Virginia required such valley fill permits.

Joe Lovett, a lawyer in Lewisburg, W.Va., and executive director of the Appalachian Center for the Economy and the Environment, helped bring the legal challenges.

"Instead of following the law, the coal industry has persuaded the Bush administration to change the law," Mr. Lovett said.

Without the rule, he said, the mining companies would have to scale back their operations because they would have no place to dump their waste.