SALAH AD-DIN, Iraq - Iraqi troops pulled back from the northern Kurdish city of Irbil yesterday, but not enough to satisfy the Clinton administration as it prepared punishment for Iraq.

Clinton approved military and economic retribution against Iraq, a U.S. official in Washington said, speaking on condition of anonymity. The United States readied its forces and sought support from allies for a military offensive, but there was no indicat ion of when it would act.

In Iraq, refugees who fled to a nearby town described the terror of Saddam Hussein's biggest offensive since the Persian Gulf War.

''It was very frightening. Boom here, boom there. Taka-taka-taka. We were scared to death,'' said Sabira Hamid Hursid, who escaped with her four children to Salah ad-Din, 20 miles northeast of Irbil.

Iraqi troops did not allow reporters to approach Irbil, where they were pulling out yesterday, leaving their Kurdish allies in control.

But U.N. workers there told The Associated Press that there were still Iraqi tanks in fields three to six miles outside the city.

White House Press Secretary Mike McCurry said the United States saw no signs of an Iraqi withdrawal from Irbil - and in fact had evidence that Iraq was moving deeper into Kurd-controlled areas.

McCurry said it appeared Saddam's objective was Sulaymaniyah, an administrative center for the Kurdish area. Iraqi troops appeared to be hunting down and killing political opponents in the areas they seized, McCurry said.

''Our interest is in making sure that Saddam does not believe that unjustified behavior of this type is cost-free,'' McCurry said. ''Our concern here is what Saddam believes he has gained from a strategic viewpoint.''

Pentagon officials said the preparations for any military steps ordered by the president had been completed. The 20,000 U.S. troops in the Persian Gulf region were on high alert.

Gen. John Shalikashvili, chairman of the Joint Chiefs of Staff, made urgent trips toSaudi Arabia and Jordan to rally Arab support.

Despite Shalikashvili's personal entreaties to King Hussein, however, Jordanian Information Minister Marwan Moasher said his country ''will not be part of any effort that involves military operations.''

The offensive prompted the United Nations to delay its plan to let Iraq resume limited oil sales despite sanctions. Yesterday, oil prices in Europe jumped sharply on the news; U.S. markets were closed for Labor Day.

Saddam's troops stormed Irbil, the main city in the U.S.-protected Kurdish ''safe haven'' in northern Iraq, on Saturday. The Kurdistan Democratic Party had asked Iraq for help in dislodging the rival Patriotic Union of Kurdistan.

As a military truck towed two anti-aircraft guns down a street, KDP fighters sat atop the weapons and shouted jubilantly, raising their machine guns above their heads.

PUK leader Jalal Talabani called on Western nations to retaliate against Iraq for the offensive in Irbil.

''Saddam Hussein must be punished and must pay the price of the crimes which he committed inside Irbil,'' Talabani told The Associated Press by satellite telephone from northern Iraq.

The spokesman for the rival KDP, Sami Abdurrahman, said his party had sought Iraq's help only after Iranian troops had moved into northern Iraq to help the PUK.

''Our rival has sided with Iran,'' Abdurrahman said at a news conference in northern Iraq. ''Iranian troops had been attacking our positions.''

Abdurrahman criticized the United States for failing to end PUK attacks against his fighters. The Kurdish safe haven in northern Iraq was carved out by the U.S.-led forces to protect the Kurds from Saddam's military after rebels mounted a failed rebellion against Baghdad in 1991.

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