The suit was filed by career employees of the Homeland Security Department, challenging rules it issued on Wednesday.
White House officials said the new procedures, affecting 110,000 employees, were a model for changes throughout the federal government.
The unions asked the Federal District Court here to issue an injunction against the final rules, which will be published on Tuesday in The Federal Register and will take effect in a few months.
Homeland Security Secretary Tom Ridge said the rules would allow the department to encourage and reward exceptional performance.
Under the rules, the department says, pay will be based on performance and competence, not on length of service. Employees rated 'less than fully successful' will not receive raises.
The rules on 'pay for performance' are sketchy, and the suit does not challenge them though union leaders reserved the right to do so later.
A spokesman for the White House Office of Management and Budget, Chad M. Kolton, said President Bush wanted to 'provide similar flexibility to other federal agencies to increase their ability to recruit, retain and motivate civil servants.'
Mr. Bush will offer detailed proposals in his budget next month, Mr. Kolton said. The proposals will be subject to approval by Congress, which, in 2002, specifically authorized the Homeland Security Department to create a 'flexible' personnel system .
The unions say the new rules strip employees of their right to bargain collectively and therefore violate the 2002 law, which created the department as part of a broad effort to prevent terrorist attacks. In passing that measure, Congress stipulated that any new personnel system had to ensure employees' collective bargaining rights.
Gregory J. O'Duden, general counsel of the National Treasury Employees Union, a plaintiff, said, 'The rules overturn 25 years of Civil Service law, radically reduce the rights of federal employees and deprive them of a voice over important issues like the time and place of work, overtime and the hiring of private contractors to do their jobs.'
The rules say the new powers are justified because officials need to maintain 'an exceptionally high degree of order and discipline in the workplace.'
Kay Coles James, director of the Office of Personnel Management, the central government personnel agency, said the rules 'fully protect the Civil Service rights of federal employees.' She issued the rules with Mr. Ridge.
The unions contend that the rules violate provisions of the 2002 law on disciplinary actions, including dismissals, demotions and suspensions. Under the rules, the unions say, unreasonable penalties can be imposed and will be upheld unless they are 'wholly without justification.'
Administration officials say Civil Service is rigid and inflexible, so managers cannot easily remove poor performers. The president of the National Treasury Employees Union, Colleen M. Kelley, said officials did not use the tools they already had to reward superior performance. Union leaders say that giving managers more 'flexibility' also creates more opportunities for abuse.
Mark D. Roth, general counsel of the American Federation of Government Employees, another plaintiff, said, 'Managers will have free rein to retaliate against employees who challenge management decisions.'
T. J. Bonner, president of the National Border Patrol Council, a unit of the federation that represents United States Border Patrol agents, said, 'The new system allows for the sort of cronyism that nearly destroyed our nation's Civil Service a century ago.'
The Homeland Security Department joined workers from 22 agencies, including the Border Patrol, the Customs Service, the Coast Guard, the Secret Service and the Federal Emergency Management Agency.
The House Democratic whip, Representative Steny H. Hoyer of Maryland, said the new rules could be used to eliminate important protections for employees and taxpayers.
'The regulations significantly limit basic employee rights, including collective bargaining rights,' said Mr. Hoyer, whose district includes many federal workers. 'Taxpayers are not served by provisions that could politicize the Department of Homeland Security.'
The roots of federal personnel policy run from the Civil Service Act of 1883, also known as the Pendleton Act, which began to replace the spoils system with competitive hiring based on merit. In the Civil Service Reform Act of 1978, Congress guaranteed certain federal employees collective bargaining rights.