The program, which was scheduled to be deployed in two years, was designed to protect navy ships and ports from attacks by missiles or manned aircraft. Like the land-based Patriot anti-missile system, it was intended to provide a last-ditch defense of small, selected areas if other defenses failed.

The surprise move Friday to cancel the program, combined with the failure Thursday of an interceptor rocket that was being tested for use in a land-based missile defense system, called into question whether the United States would be able to develop any missile defense programs on the timetable projected by the Bush administration.

It came one day after President George W. Bush formally notified Russia that the United States would withdraw from the 1972 Anti-Ballistic Missile Treaty to clear the way for unrestricted tests of missile defense systems that he hopes ultimately will provide a protective shield over the continental United States. The timing of the Pentagon announcement prompted criticism that the administration had needlessly rushed to withdraw from the treaty. The administration said that one of the main reasons for withdrawing was its desire to test part of a sea-based missile defense system.

The navy program, called Area Missile Defense, has cost $2.8 billion since the early 1990s. It had been seen as one of the areas of missile defense furthest along in development and as a result likely to be deployed sooner than other systems that are planned to defend against longer-range missiles.

"It's unfortunate we've reached this point," the Pentagon's acquisition chief, Edward Aldridge, said in a statement. He said that the Pentagon would continue trying to develop a system for knocking down incoming missiles at sea, but he did not say how. Phil Coyle, former head of the Pentagon's office of weapons testing and evaluation, said that the navy system was the most advanced of various "theater" missile defense systems, which in contrast to national systems are designed to protect battlefields and other relatively small areas. He said that theater defense systems were well ahead of more complicated national missile defense projects that intercept missiles in the boost phase and in midcourse. "And so for one of the shortest-range systems to be canceled is not a good sign," he said.

Joseph Cirincione, a missile defense critic at the Carnegie Endowment for International Peace, called the move a "serious setback" for missile defense programs, because it shows that "even the simple stuff is difficult."

The navy program would also have been used to protect warships and amphibious landing forces overseas.

In January 1997, the program scored an initial success when it hit a target missile during its first test, said Lieutenant Colonel Rick Lehner, the spokesman for the Defense Department's Ballistic Missile Defense Organization. But, he said, "problems of integration" caused the test schedule to keep "slipping until it became untenable."

The announcement followed the failure Thursday of a prototype rocket booster that would be used in midcourse missile defenses.

The Navy program, which would have put interceptors on ships at sea, was killed because it had gone more than 50 percent over budget and had fallen more than two years behind schedule, the officials said. It was known as the Navy Area Missile Defense program.

Under rules set by Congress, to save the program the Pentagon would have had to certify that it was essential to national security, that its costs could be brought under control and that no alternatives existed. Senior military officials decided that they could not make that case.

"It's unfortunate we've reached this point, but certification was impossible," Edward C. Aldridge, the under secretary of defense for acquisition, technology and logistics, said in a statement.

The program's failure underscores the technological challenges in building a defensive shield capable of protecting the entire nation from long-range missiles, a top military priority of President Bush. Intended to protect ships, ports and amphibious operations from short-range missiles, the Navy program was viewed as one of the less technically difficult anti-missile programs in the Pentagon's missile defense arsenal. "If the easy things are this difficult," said John Pike, director of GlobalSecurity.com, a military policy Web site, "the difficult things are going to be extraordinarily difficult." Mr. Pike has long been a critic of the Pentagon's missile defense programs.

But the cancellation of the program also indicates that the Bush administration's missile defense priorities may be shifting, particularly now that the president has announced his intention to withdraw from the 1972 Antiballistic Missile Treaty, which prohibited the development of ship-based defenses against long-range missiles.

By canceling the Navy Area program, which cost $2.3 billion over the past decade, the Pentagon will be able to spend more money on developing ship-based defenses against long-range missiles, programs that had been severely constricted by the ABM treaty, officials said. Those programs are intended to shoot down long-range missiles either high in the atmosphere or just after launch.

The decision came under attack from missile defense advocates who said that the Pentagon needed to be developing protection against both long- and short-range missiles.

"This is a seriously flawed decision," said Frank Gaffney Jr., president of the Center for Security Policy, a conservative military policy group. "Everybody understands we have to have missile protection for our carrier battle groups and marines and other forward elements. This is not a way to find resources."

The major problem with the Navy program was that ship-based targeting computers were not working well enough with the Aegis radar systems on missile cruisers.

Those radars were designed to track airplanes, which are larger, slower and generally easier to follow than missiles. The Navy was experimenting with computer systems that would have enabled a ship to collate data from many sensors, including satellites, airplanes and other ships.

Lt. Col. Rick Lehner, a spokesman for the Pentagon's Ballistic Missile Defense Organization, said that the Pentagon still intended to develop sea-based defenses against short- range missiles. But he said the program would first have to be reorganized.