WASHINGTON (AP) -- A U.S. military spying system was blinded for three hours at the start of the new year, the Pentagon said Saturday, in what an official called the ``one significant problem'' caused by a Y2K computer failure.

A computer that processes satellite reconnaissance data stopped working and service was partially restored within ``a few hours'' by a backup system, said Deputy Defense Secretary John Hamre.

``We are operating at less than our full peacetime level of activity today,'' he told reporters at midday Saturday. ``But all of our high priority needs -- both for the Department of Defense and other national customers -- are fully being met.''

By midafternoon Saturday, the Defense Department had not yet returned to the normal system.

Hamre said the problem did not involve America's strategic early warning defense systems. But, citing the sensitive nature of the intelligence system, declined to say where the computer system was located or whether it was taking photos or monitoring radio or other transmissions.

``The satellites were always under ... control,'' Hamre said. ``Our problem was actually was here on the ground, in the processing station.''

Private defense analyst Helmut Sonnenfeldt said it was difficult to comment on the incident because the Pentagon didn't say the kind of information being collected or intercepted, whether information was irretrievably lost, of whether there was any evidence anyone took advantage of the breakdown period ``to use for whatever purpose.''

``I wouldn't lose any sleep over it because I don't know what the satellites were doing, ... and I think one would have heard about precautions being taken if they thought there was something here that was fishy,'' said Sonnenfeldt of the Brookings Institution.

``Obviously, it was a sufficiently important system for them to have a backup,'' even if the backup only partially works, he said.

``But if that's the only one (system failure), I think they're lucky considering how much concern there was with this whole problem of Y2K.''

Hamre said the system failed after 7 p.m. EST Friday, or midnight GMT, when Pentagon computers rolled into the new year.

Except for that problem, most of the rollover from 1999 to 2000 ``was uneventful,'' Hamre told a briefing.

``We had a number of small anomalies around the world, very small,'' Hamre said. ``We did have a cash register that refused to process receipts in Okinawa. So we're looking at that level of detail.''