Thirty million newly designed $50 bills are being held out of circulation because of a tiny printing flaw behind the portrait of Ulysses S. Grant.

Normally, the flaw wouldn't be enough to keep the bills on the shelf. But Treasury Department and Federal Reserve officials said they want the first copies the public sees to be near perfect.The new design, being introduced a year and a half after a new $100 note, is packed with features designed to thwart counterfeiters. A decision hasn't been made yet whether to destroy the imperfect bills, which cost $1.44 million to make. They may circulate later.

"The notes that were produced are clearly functional notes," said Larry Felix, a spokesman for Treasury's Bureau of Engraving and Printing. "But clearly, if you're going to introduce notes for the first time, you're going to make sure the notes are as flawless as possible."

He said the flaw, a small break in the fine concentric lines behind the portrait of Grant, is not unusual, even in bills the bureau has been printing for decades.

Treasury prints the nation's folding money and the Federal Reserve circulates it.

New 50s with the anomaly, first reported Wednesday by The Washington Times, have been placed under seal at Federal Reserve district banks, said Federal Reserve spokesman Joseph Coyne.

"We consider this a close call whether they are functional or not," Coyne said. "We felt these bills were not good enough to use in the first year."

The first year of circulation is critical because people unfamiliar with the new design might mistake the printing anomaly in some as an indication they're counterfeit.

"It is critical that the new bills have no flaws that would undermine public confidence in them," said Rep. Michael N. Castle, R-Del., chairman of the House Banking monetary subcommittee. "The large number of imperfect bills may be more than just a minor problem and should not be handled lightly."

Secret Service spokesman Arnette Heinze said his agency "will operate on whatever is issued" by the Federal Reserve.

"It's not a concern if there is a minor anomaly if we know what that is. Quite possibly, the public would never see it. It's genuine anyway, even if you could notice it," he said.

Felix said the new $50 notes will be introduced into circulation by the end of the fall, as scheduled. But only copies without the anomaly will circulate for now, he said.

"Since the end of August, we have modified the plate and we've eliminated the problem," he said.

He said a random sample of the 150 million bills printed between late May and late August indicates about 20 percent have the anomaly. At a cost of 4.8 cents each, it would cost $1.44 million to replace them if they must be destroyed.

Most of the flawed notes were shipped to the Federal Reserve Bank of New York and a small quantity to district banks in Chicago and Cleveland, he said.

The newly designed $50 bill, featuring an off-center and enlarged picture of Grant on the front and a contemporary engraving of the Capitol on the back, replaces a design in circulation since 1929.

It includes a watermark to the right of Grant's portrait, an embedded polymer security thread that glows yellow in ultraviolet light and color-shifting ink in the numeral in the lower righthand corner of the bill's front.