Moreover, important questions about the technology's safety and oversight remain unanswered and under-studied, the report concludes. Research on the health effects of nanomaterials -- and necessary revisions in the way they are regulated -- are lagging, government officials said, even as the novel materials find their way into an ever-widening spectrum of products, including clothing, cosmetics and computer hard drives.

The toxicity studies now underway are "a drop in the bucket compared to what needs to be done," John H. Marburger III, science adviser to President Bush and chief of the White House Office of Science and Technology Policy, said at a media briefing last week.

Nanotechnology, which deals with materials and devices manufactured on the scale of billionths of a meter, is widely touted as the engine of the next industrial revolution. The promise is not so much its ability to produce ever smaller and more efficient machines -- although that is certainly one aspect of its attraction. The main benefit of gaining control over such tiny bits of matter is that ordinary materials behave in extraordinary ways when shaved down to the scale of atoms and molecules.

Platinum, for example, which is at the heart of catalytic converters, removes pollutants from auto exhaust far more efficiently as nanoparticles. That can reduce the quantities of the expensive metal needed -- and the amount that ends up in junkyards and dumps.

Similarly, unlike larger chunks of carbon -- such as the graphite in pencils, which does not conduct electricity well -- microscopically thin nanotubes of carbon are excellent conductors of electricity. Before long, they may replace copper wire for some applications.

The new report is the work of the President's Council of Advisors on Science and Technology, a 24-member committee of experts from industry, academia and research institutions tasked with periodically assessing the nation's nanotech research and development programs. The first such report, prepared with the help of dozens of outside experts, is scheduled to be released next month but was previewed at a council meeting last week.

In terms of global competitiveness, the report offers good news for the United States -- at least for now.

"The data seem to conclusively say we are the leader," said E. Floyd Kvamme, co-chairman of the committee with Marburger. "But the data also conclusively say that a lot of others are getting interested."