WASHINGTON -- In a major blow to the so-called property rights movement, the U.S. Supreme Court yesterday made it easier for government to condemn private property and turn it over to private developers in hopes of creating jobs and increasing tax revenue.

By a 5-4 vote, the justices rejected a challenge by homeowners and businesses in New London, Conn., to the use of eminent domain to acquire their properties as part of a large-scale development anchored by a Pfizer Inc. research center.

Writing for the majority in Kelo v. City of New London, Justice John Paul Stevens said that the redevelopment was a "public use" that justified the seizure of 15 properties, so long as the owners -- including Wilhelmina Dery, who was born in her house in 1918 and never has lived anywhere else -- are compensated.

The Fifth Amendment to the U.S. Constitution says: "Nor shall private property be taken for public use, without just compensation." Over the years, the court has ruled that "public use" includes not only bridges, highways and railroad rights-of-way but also the redevelopment of blighted urban areas.

Stevens noted that officials in New London, which was classified by the state of Connecticut as a "distressed municipality," determined that the city would be revitalized by the development plan, which included the pharmaceutical giant's facility, a state park, office and retail space and parking for visitors to a nearby marina.

Rejecting another argument by the property owners, Stevens said it would be unwise for courts to second-guess those officials by insisting that they show with "reasonable certainty" that a particular development would produce the promised benefits.

But dissenting Justice Sandra Day O'Connor accused the majority of abandoning the "long-held" principle that government may not take property from one person and give it to another.

"Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded -- i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public -- in the process," O'Connor wrote.

Under Stevens' interpretation, she said, "nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

O'Connor also said the fact that elected officials approved the New London development was irrelevant to the constitutional issue, and she dismissed Stevens' suggestion that citizens who wanted greater protection for private property could lobby their state legislators.

"This is an abdication of our responsibility," O'Connor wrote. "States play many important functions in our system of dual sovereignty, but compensating for our refusal to enforce properly the Federal Constitution (and a provision meant to curtail state action), is not among them."

Bert Gall, a lawyer for the Institute for Justice, which represented Susan Kelo and eight other property owners in the Fort Trumbull area of New London, said, "This is a dark day for American homeowners" but added that "the fight will continue."

Stevens was joined in the majority by three other liberal justices, David H. Souter, Ruth Bader Ginsburg and Stephen Breyer, and by Anthony Kennedy, a moderate conservative who is often a swing vote. Kennedy also filed a concurring opinion suggesting that some condemnations of private property might be unconstitutional if there is "the risk of undetected impermissible favoritism of private parties" by the body exercising eminent domain.

O'Connor's dissenting opinion was signed by Chief Justice William H. Rehnquist and Justices Antonin Scalia and Clarence Thomas. Thomas also filed his own dissenting opinion suggesting that the court should reconsider earlier precedents on which yesterday's ruling was based.

Property-rights activists had seen the Kelo case as an opportunity to slow or even reverse the expansion of the definition of "public use."

Unlike other cities -- including Pittsburgh -- New London had not declared the area it targeted for redevelopment as "blighted." In upholding the use of eminent domain in a 1954 case involving Washington, D.C., the high court had specifically found that eliminating "blighted areas that tend to produce slums" was a public purpose.

But yesterday's decision went further, said David B. Snyder, a specialist in eminent domain at the Philadelphia law firm of Fox Rothschild, which also has an office in Pittsburgh.

"What makes this novel is and what has everyone talking is that the court has given local governments the green light to use eminent domain for purely economic development," Snyder said.

Widener University School of Law Professor D. Benjamin Barros, who teaches at the school's Harrisburg campus, said that yesterday's decision was a logical extension of earlier decisions giving a broad meaning to public use -- including a 1984 case in which O'Connor wrote the majority opinion.

But Barros added that "this was a good case if the court wanted to draw the line because it was pushing the envelope" on what constitutes a public use and because the homeowners who will be displaced were sympathetic figures.

"A lot of us were wondering if some municipality would do something that seemed so outrageous that the court would gag," Barros added. "In this case the court didn't gag."