WASHINGTON (AP) - In a dramatic reversal, President Barack Obama on Friday scrubbed a clean-air regulation that aimed to reduce health-threatening smog, yielding to bitterly protesting businesses and congressional Republicans who complained the rule would kill jobs in America's ailing economy.

Withdrawal of the proposed regulation marked the latest in a string of retreats by the president in the face of GOP opposition, and it drew quick criticism from liberals. Environmentalists, a key Obama constituency, accused him of caving to corporate polluters, and the American Lung Association threatened to restart the legal action it had begun against rules proposed by President George W. Bush.

The White House has been under heavy pressure from GOP lawmakers and major industries, which have slammed the stricter standard as an unnecessary jobs killer. The Environmental Protection Agency, whose scientific advisers favored the tighter limits, had predicted the proposed change would cost up to $90 billion a year, making it one of the most expensive environmental regulations ever imposed in the U.S.

However, the Clean Air Act bars the EPA from considering the costs of complying when setting public health standards.

Obama said his decision was made in part to reduce regulatory burdens and uncertainty at a time of rampant questions about the strength of the U.S. economy.

Underscoring the economic concerns: a new report Friday that showed the economy essentially adding no jobs in August and the unemployment rate stubbornly stuck at 9.1 percent.

The regulation would have reduced concentrations of ground-level ozone, the main ingredient in smog, a powerful lung irritant that can cause asthma and other lung ailments. Smog is created when emissions from cars, power and chemical plants, refineries and other factories mix in sunlight and heat.

Republican lawmakers, already emboldened by Obama's concessions on extending Bush-era tax cuts and his agreement to more than $1 trillion in spending reductions as the price for raising the nation's debt ceiling, had pledged to try to block the stricter smog standards as well as other EPA regulations when they returned to Washington after Labor Day.

A spokesman for House Speaker John Boehner, R-Ohio, had muted praise for the White House Friday, saying that withdrawal of the smog regulation was a good first step toward removing obstacles that are blocking business growth.

Thomas Donohue, president of the U.S. Chamber of Commerce, said the move was "an enormous victory for America's job creators, the right decision by the president and one that will help reduce the uncertainty facing businesses."

White House officials said the president's decision was not the product of industry pressure, and they said the administration would continue to fight other efforts by Republicans to dismantle the EPA's authority.

But that was little consolation for many of the president's supporters. The group MoveOn.org issued a scathing statement, saying Obama's decision was one it would have expected from his Republican predecessor.

"Many MoveOn members are wondering today how they can ever work for President Obama's re-election, or make the case for him to their neighbors, when he does something like this, after extending the Bush tax cuts for the rich and giving in to tea party demands on the debt deal," said Justin Ruben, the group's executive director.

The American Lung Association, which had sued the EPA over Bush's smog standards, said it would resume its legal fight now that Obama was essentially endorsing the weaker limit. The group had suspended its lawsuit after the Obama administration pledged to change it.

Obama's decision, in fact, mirrors one made by Bush in 2008. After EPA scientists recommended a stricter standard to better protect public health, Bush personally intervened after hearing complaints from electric utilities and other affected industries. His EPA set a standard of 75 parts per billion, stricter than one adopted in 1997, but not as strong as federal scientists said was needed to protect public health.

In March, the EPA's independent panel of scientific advisers sent a letter to the agency's administrator, Lisa Jackson, saying it was its unanimous recommendation to make the smog standards stronger and that the evidence was "sufficiently certain" that the range proposed in January 2010 under Obama would benefit public health.

But the White House, which has pledged to base decisions on science, said Friday the science behind its initial decision needed to be updated, a process already under way at EPA. The smog standard now is to be revised until 2013.

Whether Obama still occupies the White House at that point depends on the outcome of next year's presidential election.