The federal government has agreed to halt oil and natural gas lease sales off the Louisiana coast until environmental studies determine whether drilling degrades the coastline, the Department of the Interior announced Tuesday.

Gov. Kathleen Blanco sued the agency in July, trying to block it from selling leases to 381 tracts in the western Gulf of Mexico for future oil and gas exploration. The sale went ahead, with 62 companies submitting $340 million in high bids.

The agency said Tuesday it settled the lawsuit by requiring that companies planning to drill in those areas prepare a new environmental assessment, subject to review by Louisiana coastal officials.

The department also agreed to postpone a lease sale planned for March until it completes a new environmental impact study, taking into account the 217 square miles of Louisiana's coast that were washed away in Hurricanes Katrina and Rita last year.

Interior Secretary Dirk Kempthorne called Blanco to acknowledge the settlement on Tuesday, Blanco said.

Blanco called the settlement a breakthrough that will give Louisiana new power over its own coast. She said the settlement will lead to an influx of federal money because the environmental assessments are expected to show that drilling contributes to the steady erosion of Louisiana's marshy coast.

“I fully expect that an honest environmental assessment will lead to money” from the federal government, she said at a news conference.