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NEW YORK A federal appeals court on Tuesday ruled that federal prosecutors investigating a leak about a terrorism funding probe can see the phone records of two New York Times reporters.

A panel of the 2nd U.S. Circuit Court of Appeals held in a 2-1 vote that prosecutors had a valid interest in seeing who had contacted the reporters.

"We see no danger to a free press in so holding," Judge Ralph K. Winter wrote for the majority.

The case involved stories written in 2001 by Times reporters Judith Miller and Philip Shenon that revealed that the government planned to freeze the assets and search the offices of two Islamic charities, the Holy Land Foundation and Global Relief Foundation.

U.S. Attorney Patrick Fitzgerald then opened a grand jury probe into the source of the newspaper reports, claiming the reporters' phone calls to the charities seeking comment had tipped them off about the investigation.

When the paper declined to identify its sources, Fitzgerald threatened to subpoena Times billing records from the phone company. The newspaper then filed a lawsuit seeking to block any such effort.

In February 2005, the newspaper appeared to achieve a victory when U.S. District Judge Robert Sweet ruled that the government had failed to prove that it had exhausted all other methods before resorting to the demand for phone records.

The 2nd Circuit panel disagreed.

"No grand jury can make an informed decision to pursue the investigation further, much less to indict or not indict, without the reporters' evidence," Winter wrote.