The decision by Veterans Affairs Secretary Edward J. Derwinski last week to stop fighting with the nation's Vietnam veterans over whether Agent Orange had become one of their war's silent killers shook one of the federal government's largest and most tradition-bound bureaucracies.

It was a triumph of politics over science and of symbolism over custom. It was also a high-risk ploy by a junior Cabinet member, one that could place him at odds with other members of the administration and boost the costs of caring for the nation's veterans when President Bush is pleading for budgetary restraint.Derwinski, who learned Washington's ways in 24 years as a congressman from South Chicago and in six in the State Department, decided not to appeal a federal judge's ruling that his department had ignored its rules and Congress' intent with its bitter two-year court fight over Agent Orange.

The agency disputed claims that the widely used defoliant in Vietnam has caused cancers, birth defects and other ailments among the 3.1 million Americans who served in Southeast Asia during the war. Some of the department's lawyers told Derwinski in a strategy session on Wednesday that the judge's 48-page ruling had left them with a good chance for winning on appeal.

But Derwinski also knew the value of timing, and he also introduced a relatively new factor in the agency's decision-making - concern about the department's public image.

The veteran politician knew that his decision would be seen as a symbolic action that would telegraph his style both to the department's massive bureaucracy and to the many veterans organizations.

"I knew the perception of the VA would be seriously damaged if we appealed," he said in an interview Friday. " . . . If we appealed we would obviously be the Scrooge."

Since the late 1970s, Vietnam veterans with increasing anger have been pressing the federal government to compensate them for the damage they say was caused by the use of millions of gallons of the herbicide because of dioxin, a cancer-causing component. In 1984, the seven chemical companies that made the herbicide and sold it to the government in barrels painted with orange strips agreed to pay $180 million to veterans to settle a class-action suit.

But the federal government, inspired, some veterans said, by successive administrations more interested in frugality than humanity, refused to yield. Despite a 1984 law urging recognition of Agent Orange-related illnesses, the department fought a lawsuit filed by in 1987 by the tiny, but vocal, Vietnam Veterans of America over the issue.

The question of how much damage exposure to Agent Orange did to U.S. troops has been a nightmarish one for federal researchers because every link in the chain of evidence is obscured.

The department, using a scientific panel created by by the 1984 law, had taken the cautious approach.

VA Administrator Thomas K. Turnage, a retired Army general who was Derwinski's predecessor, said the agency had to establish a direct cause-and-effect link between a chemical and all its effects on human health. That is a notoriously difficult problem and one that scientists say can consume decades of study.