ATLANTA &

Mississippi's plan to divert $600 million in hurricane housing relief funds to a port expansion project won federal approval Friday, despite opposition from those who say the housing needs of thousands of people displaced by Hurricane Katrina have not been met.




In a letter to Mississippi Gov. Haley Barbour, Housing and Urban Development Secretary Alphonso Jackson said he remained concerned that the state's plan would shift money from "more pressing recovery needs."




Jackson had little choice but to approve the plan, however, because congressional language regarding block grant funds allowed him "little discretion" to tell states how to spend federal money.




"I'm sure that you share my concern that there may still be significant unmet needs for affordable housing," he wrote, "and I strongly encourage you to prioritize Gulf Coast housing as you move forward."




The port expansion plan &

which will use the last of the housing recovery money allocated by Congress after Katrina &

has been a subject of great contention on the Mississippi coast, where more than 30,000 residents still live in Federal Emergency Management Agency trailers and mobile homes.




Officials say expanding the harbor at Gulfport, which sustained an estimated $50 million in damage, would fuel the economy and create 1,300 jobs in the next 10 years.




Critics, in turn, say the state has failed to commit sufficient money to rebuilding rental housing and assisting homeowners whose properties were damaged by the hurricane's winds.




Despite HUD's approval of the plan Friday, the battle over Mississippi's hurricane recovery money might not be over.




Earlier this week, Rep. Barney Frank, D-Mass., and Rep. Maxine Waters, D-Calif. &

who say the port expansion violates Congress' intended purpose for the funds &

told Jackson that they were prepared to hold oversight hearings into the matter.




On Friday, Frank said he suspected Jackson's decision to approve the plan was motivated by politics rather than the law. He said a housing subcommittee might look into whether HUD could have blocked the plan legally.




"Haley Barbour is a very powerful Republican politician," he said. "My fear is that he went over the HUD secretary's head and the White House intervened."




Mississippi officials say there are not enough funds to restore or rebuild all of the 169,000 homes in the state that were damaged or destroyed. The $600 million, they say, would be best invested in the port.




Established in 1974 to improve housing and economic opportunities for poor people, the Community Development Block Grant program requires that at least 70 percent of funds benefit people with low or moderate incomes. Congress lowered that requirement to 50 percent for Katrina emergency relief on the basis that the natural disaster affected all residents whatever their income.




Mississippi, the poorest state in the nation, has been the only state to request a blanket waiver for this 50 percent requirement. After turning down the state's request for a blanket waiver three times, HUD has approved waivers on a piecemeal basis for 80 percent of the state's emergency programs.




In his letter to Barbour, Jackson said that he was pleased to learn of Mississippi's recent announcement to add $100 million of federal aid to a program to develop workforce housing.




Yet this news has not quelled criticism in Mississippi that money is being diverted from the poor. Local advocates said that the $100 million is simply being transferred from another program to give grants to low-income homeowners whose houses flooded.




"You cannot walk around here without seeing people struggling to get back in homes," said James W. Crowell, president of the Biloxi, Miss., branch of the NAACP.




"The governor was given the money to help people and now he has taken it away. I just pray that one day we can say our local government and national government saw fit to get us back to our homes."