TRENTON - In a major victory for the McGreevey administration, a state judge yesterday upheld New Jersey's $175 million plan to revitalize Camden and seize unprecedented control over the city's daily operations and school board.

Superior Court Judge Andrew J. Smithson dismissed two lawsuits that contended the revised recovery act signed by Gov. McGreevey in December was unconstitutional because it singled out Camden for special treatment.

"This court is satisfied that the constitutional challenges to the act must fail," Smithson said.

Juliet Johnson, a spokeswoman for McGreevey, said the ruling would "lay the foundation for the city's renewal."

Opponents interpreted the decision as a setback for the city, whose elected officials will be stripped of their powers.

"Camden effectively becomes an occupied territory," school board member Dwaine J. Williams said. "The state is going to make all of the decisions for us."

The ruling clears the way for the state to sell bonds under the Municipal Rehabilitation and Economic Recovery Act to provide money for Camden's hospitals, universities and neighborhoods.

"Camden is now freed to move ahead," said State Sen. Wayne R. Bryant (D., Camden), who spearheaded the law. "Now we can put behind the rhetoric to build the city, jobs, opportunity, and hope for the children."

In exchange for the money, the city is being placed under the control of a state-appointed chief operating officer who has veto power over the mayor and City Council.

Former Mayor Melvin "Randy" Primas was appointed to the post last year, but his authority was restricted pending the legal challenges. He called yesterday's ruling "a historic day" for Camden, saying: "The moment we've all been waiting for has finally arrived."

Under the law, the school elections scheduled for next month will be suspended, and the Board of Education will be restructured with mayoral and gubernatorial appointees.

Smithson lifted an injunction that had barred McGreevey from making the appointments. State officials yesterday offered no timetable for the appointments.

The law also gives the governor veto power over board actions, essentially giving the state control over the district's $282 million annual budget and its 18,500 students and 4,000 employees.

In an unrelated development yesterday, the Camden County prosecutor took control of the city's beleaguered Police Department.

Smithson's ruling in Mercer County drew swift reaction from a packed courtroom of Camden residents, community and religious leaders, and city officials on both sides of the dispute.

"It's been a long time in coming - a long fight," said Ronald Evans, a member of the board of directors of Camden Churches Organized for People. "But we had faith."