The makers of handcrafted toys have received some hope with support from a federal agency for proposed exemptions from strict lead-testing regulations they feared could put them out of business.

Last year's discovery of lead paint in mass-market toys prompted the government to pass new safety rules requiring testing and labeling that mom-and-pop workshops and retailers said they could not afford.

As a February deadline for complying with the law loomed, toymakers who use benign materials such as unfinished wood, organic cotton and beeswax sought exemptions from the rules they said could apply to them.

In a memo released Wednesday, Consumer Product Safety Commission staffers recommended that the agency exempt some natural materials from the lead testing requirements.

The announcement was welcomed by leaders of the Handmade Toy Alliance, a group that has been pushing lawmakers to exempt small toy companies from testing and labeling rules.

However, some business owners say a more comprehensive solution is needed.

Denise Mollison, who runs a small business making soft cloth dolls out of her Kailua home, said she was glad officials were at least talking about the regulation, but added the proposed exemptions don't go far enough.

"This regulation would put me and thousands of other stay-at-home moms out of businesses," said Mollison, owner of The Lucky Pebble LLC.

Rather than create a list of exempt materials, Mollison said she would prefer a system where companies that make the materials that go into her dolls and other toys certify their products as lead free.

Small businesses like hers simply do not have the resources to hire experts to test materials for lead, she said.

"I want to be clear. I don't want to fly under the radar; I just want a cost-effective way to prove our products are safe," said Mollison, a mother of three.

The regulation was proposed largely as the result of lead found in toys imported from China. One of the the major components in Mollison's dolls are Red Heel Socks made by Fox River in in Osage, Iowa.

Mollison also uses fabric she buy locally at craft and dry goods stores such as Ben Franklin. She noted that lead has been banned in fabric dyes in the U.S. for years. Her dolls are stuffed with either a polyester filling made in Hawai'i or wool brought in from the Mainland.

Mollison started out making dolls as therapy toys for her daughter who has a rare disorder called Russell Silver Syndrome. She expanded 18 months ago into other kinds of soft dolls, which sell for $30 to $40. She said she has sold 295 dolls since launching her business.

Mollison is a member of the Handmade Toy Alliance, which has asked lawmakers to exempt small toy companies from testing and labeling rules.

Staff toxicologists at the product safety commission told agency commissioners in the memo that some unfinished natural materials should be considered lead free. The materials include wood and fibers such as cotton, silk, wool, hemp, flax and linen.

The safety commission still must vote on the recommendations.

"The agency is diligently working on providing rules that would define some exclusions and some exemptions," said Julie Vallese, a spokeswoman for the product safety commission.

Lead paint prompted recall of 45 million toys last year, mostly made in China. Parents flocked to small specialty toy stores in the aftermath searching for safer alternatives.

In August, President Bush imposed the world's strictest lead ban in products for children 12 or younger by signing the Consumer Product Safety Improvement Act.

Small toymakers strongly back the restrictions in the bill, which they say reflect voluntary standards they have long observed to keep harmful substances out of toys. But they never thought their products would also be considered a threat.

Under the law, all children's products must be tested for lead and other harmful substances. Toy makers are required to pay a third-party lab for the testing and to put tracking labels on all toys to show when and where they were made.

Those requirements make sense for a multinational toy manufacturer churning out thousands of plastic toys on an overseas assembly line, said Marshall

But a business that makes, for example, a few hundred handcrafted wooden baby rattles each year cannot afford to pay up to $4,000 per product for testing, a price some toy makers have been quoted, he said.

Rep. Bobby Rush, D-Ill., lead sponsor of the legislation, said toymakers should not worry. Rush said the law already exempts products and materials that do not threaten public safety or health.

"This exemption should be sufficient to affect most companies," Rush said in an e-mail to The Associated Press.

But without specific guidelines from the safety commission and a Feb. 10 deadline approaching, small toy makers felt they had no choice but to follow the law or risk facing fines of $100,000 per violation.

Because the exemptions apply only to unfinished materials, very few toymakers will have products that are entirely spared from testing, said Julia Chen, owner of The Playstore in Palo Alto, which specializes in wooden and organic playthings.

"Let's be real and focus on these mass produced, manmade-material toys, because those are the ones that caused the problems we know about," she said.