The 5-4 ruling further erodes the figurative wall separating church and state and clears a constitutional cloud from vouchers, an education idea dear to political conservatives and championed by President Bush.
Vouchers use taxpayer money to underwrite private or parochial school tuition. Opponents call them a fraud that will only siphon tax money from struggling public schools.
Closing its 2001-2002 term, the court endorsed a 6-year-old pilot program in inner-city Cleveland that provides parents a tax-supported education stipend. Parents may use the money to opt out of one of the worst-rated public school systems in the nation.
"We believe that the program challenged here is a program of true private choice,'' Chief Justice William H. Rehnquist wrote for himself and Justices Sandra Day O'Connor, Antonin Scalia, Anthony M. Kennedy and Clarence Thomas.
The court majority said the program does not put the government in the unconstitutional position of sponsoring religious indoctrination, even though more than 95 percent of the vouchers are used to subsidize Catholic or other religious schooling.
Bush has been a staunch advocate of school vouchers, and emphasized the issue in his campaign for the White House.
Congress last year shelved that effort. But Bush resurrected the idea, proposing in his 2003 budget to give families up to $2,500 per child in tax credits if they choose a private school rather than a failing neighborhood public school.
The Bush administration sided with Ohio, arguing to the high court that the program is constitutional because parents control where the money goes.
Key to the court's reasoning in the voucher case was that children in the Cleveland program have a theoretical choice of attending religious schools, secular private academies, suburban public schools or charter schools run by parents or others outside the education establishment.
The fact that only a handful of secular schools and no suburban public schools have signed up to accept voucher students is not the fault of the program itself, its backers say.
"The court ruled that any program in which parents choose where to direct education funding and a broad range of options is provided passes constitutional muster,'' said Clint Bolick, who represented parents enrolled in the program.
The dissenting justices said the Cleveland program goes too far toward state-sponsored religion. It does not treat religion neutrally, as Rehnquist contended, wrote Justice David H. Souter. The majority is also wrong about whether parents have a true choice among schools, Souter wrote for himself and Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer.
"There is, in any case, no way to interpret the 96.6 percent of current voucher money going to religious schools as reflecting a free and genuine choice by the families that apply for vouchers,'' Souter wrote.
Today's ruling continues the conservative court majority's recent pattern of mandating equal treatment for religious organizations or ideas. In general, the court has ruled that once a public-funded benefit or forum is available to secular users, it cannot be denied to religious users merely because they are religious.
Using that rationale, the court has opened schoolhouse doors to a Bible club, required school funding for a religious magazine and allowed government aid for computers and tutoring in parochial schools.
Supporters of vouchers prefer the term "school choice,'' and say the arrangement gives parents power to reject chaotic and dangerous public schools and sluggish bureaucracies.
"This is going to be a whole new thing for people around the country. It gives people choice to spend their tax funds in a school where they can get a good education,'' said Lori Kaloger, who has three children attending a Catholic school with vouchers.
By endorsing the Cleveland program, the court drew a map for numerous states and cities awaiting a ruling before seriously considering their own versions.
The decision probably also protects two other tax-supported voucher programs, in Milwaukee and Florida.
The debate will probably shift now to state legislatures. Teachers' unions lead the opposition to vouchers, which they say skim the most motivated students and parents from public schools, and rob those schools of much-needed money.
"Vouchers are bad education policy, and we will continue to fight efforts to introduce them into public education,'' said Sandra Feldman, president of the American Federation of Teachers.
"Our nation's commitment to public education is long-standing, built upon the principle of open and equal access for all our children. This decision undercuts that principle and commitment.''
The Cleveland program, set up by the Ohio Legislature, provides $2,250 tuition assistance vouchers to about 4,000 of the district's 57,000 elementary-age students. The money may be used at any of 51 participating schools, all but nine of which are religious. Most are Catholic.
The cases are Zelman v. Simmons-Harris, 00-1751; Hannah Perkins School v. Simmons-Harris, 00-1777; Taylor v. Simmons-Harris, 00-1779.