The federal agency that oversees AmeriCorps (search) must stop funding programs that place volunteers in Catholic schools, a judge has ruled, saying it unconstitutionally crosses the line between church and state.

U.S. District Judge Gladys Kessler sided with the American Jewish Congress (search), which argued that federal dollars were being used improperly to teach Christian values to AmeriCorps participants through the Alliance for Catholic Education (search) program. Kessler's decision Friday was posted on the court's Web site Tuesday.

The Corporation for National and Community Service (search), which runs AmeriCorps, argued that its funding was awarded based on a program's secular activities, not the religious teaching and daily Mass and prayer services that it said were a separate part of the program.

But Kessler disagreed, ruling Friday that the line between the secular and nonsecular activities had become "completely blurred." She noted that the government did not monitor the programs enough to ensure the activities were mostly nonsecular.

"Such direct government involvement with religion crosses the vague but palpable line between permissible and impermissible government action under the First Amendment," Kessler wrote.

The Corporation for National and Community Service, which has 60 days to appeal the ruling, did not immediately return phone calls seeking comment Tuesday.

The ruling could have broader implications for President Bush's "faith-based initiative," which seeks to use religious organizations to provide social services. Supporters say the groups provide much-needed help to government agencies, but the effort has stalled in Congress because of debate over its constitutionality.

Marc Stern, general counsel for the American Jewish Congress, said the ruling could open the door to additional litigation against some of Bush's grants to religious groups, since the decision places a heavier burden on government to ensure federally funded programs don't promote religion.

"This is one case that shouldn't have had to be brought, since the constitutional violation in paying parochial school teachers to teach religion is so obvious," Stern said. "One wonders what the government has been thinking all these years."

The Corporation for National and Community Service, which Congress created in 1993, oversees Senior Corps, Learn and Serve America and AmeriCorps, whose workers help nonprofit groups build affordable housing, teach skills, run after-school programs and organize disaster assistance. Grants are distributed by AmeriCorps to nonprofit agencies.