The Illinois senator has decided to forgo the public funds, said an official close to the Obama campaign, who spoke on condition of anonymity. The move allows him to raise and spend unlimited private money.

The Hawai'i-born Obama joins New York Sen. Hillary Rodham Clinton and former North Carolina Sen. John Edwards, both of whom recently decided to skip public financing of their campaigns. Edwards and Obama also say they won't accept money from lobbyists or political action committees.

Strategists from both parties estimate that the 2008 race could cost each nominee $500 million — far more than the Presidential Election Campaign Fund can afford. It is financed through the $3 checkoff on federal income tax returns.

The fund, which is expected to have about $200 million by the end of 2007, still would help pay for party presidential nominating conventions and assist primary candidates who do not raise large amounts of money.

While both President Bush and Democratic challenger John Kerry rejected public funding for their primary campaigns in 2004, they did accept $74.5 million each for the general election campaign. The funding for the general election was expected to reach $85 million for the major party candidates in 2008.