SUZANNE GAMBOA

WASHINGTON -- President Bush has signed an executive order requiring contractors and others who do business with the federal government to make sure their employees can legally work in the U.S.

The federal government has had some embarrassing moments when illegal workers have been discovered to be working for contractors they've hired, Homeland Security Secretary Michael Chertoff said in a news conference. For that reason it's trying to get its own house in order, Chertoff said.

"The federal government should lead by example and not merely by exhortation," he said. The order says federal departments and agencies must require contractors to use an electronic system to verify that the workers are eligible to work in the U.S.

Homeland Security operates the Web-based E-Verify system, which Chertoff said 1,000 employers a week are signing up to use. The system allows employers to check Social Security numbers provided by employees. The order would affect hundreds of thousands of workers, at the least, and potentially millions, Chertoff said.

Most employees fill out I-9 forms and submit accompanying documents that employers generally look over to determine whether the worker is legitimate. With E-Verify system, employers enter a name and Social Security number into a computer using the Internet.

E-Verify checks various government databases to make sure the number is legitimate and that it goes with the name that was submitted. If there are problems, the person is tagged as a potentially illegal worker and must resolve the discrepancy.

Bush's order is aimed at cracking down on hiring of illegal immigrants, but the order could snag people who have overstayed visas or came to the country legally but do not have permission to work, such as some students or those awaiting work permits.

The order comes as a worker verification bill has essentially stalled in Congress. A Democratic immigration enforcement bill would require employers to check the citizenship and legal status of all their employees.

"I think it's a great decision. I think it's what the American people have been asking for, common-sense, basic things that are not Draconian or dramatic. Employer verification addresses the real problem and that is illegal employment," said Rep. Brian Bilbray, a California Republican who heads the Immigration Reform Caucus, a group of lawmakers who support tougher immigration laws.

The issue of using E-Verify has run into opposition over the years from business groups who say the system is burdensome and civil libertarians who say it will lead to discrimination and job losses by U.S. citizen workers misidentified as illegal workers.

Chertoff said the system gives correct results 99.5 percent of the time and legal workers are able to resolve problems in less than two days.

But Tim Sparapani, lobbyist with the American Civil Liberties Union, said the president's immigration announcement "will vastly increase, not decrease, the incidence of identity thefts because they are turning work-eligible American workers' identities into black market commodities."