The move comes as the House debated the annual defense authorization bill to guide the Pentagon budget for the fiscal year that began last week.
After House approval, the measure would go to the Senate for final congressional action and then on to the White House for Obama's signature.
Obama's veto threat involves a program to develop an alternative engine for the F-35 Joint Strike Fighter, the Air Force's multi-mission fighter for the future. The second engine would be built by General Electric Co. and Rolls-Royce in Ohio, Indiana and other states. The main F-35 engine is built in Connecticut by Pratt & Whitney.
The administration promised in June to veto the legislation if it would "seriously disrupt" the F-35 program, a vague test at best. It says that spending on a second engine is unnecessary and impedes the progress of the Joint Strike Fighter program. The legislation recommends $560 million for the program in 2010.
The Pentagon says the Pratt & Whitney engine is performing well and that the second engine adds unnecessary costs and would delay the program. Supporters of the program say it provides competition that would boost contractors' performance and tamp down costs.
Lawmakers have parsed the Obama threat and decided not to take it seriously.
"I think if they ... were going to carry it out, they would have been more explicit," said Rep. John Spratt Jr., D-S.C., a senior member of the Armed Services Committee.
"It would be a shock to me" if Obama vetoed the measure, said the panel's top Republican, Howard "Buck" McKeon of California.
In fact, the Pentagon is already backpedaling.
"Our position on this is that if the final bill ... calls for further investment in the second engine, the department will carefully evaluate the impact on the overall Joint Strike Fighter program before making recommendations to the president about whether or not to veto the legislation," said Pentagon spokesman Bryan Whitman.
Obama and Defense Secretary Robert Gates, however, did prevail in a battle to kill the over-budget F-22 fighter program, which has its origins in the Cold War era and is poorly suited for anti-insurgent battles in Iraq and Afghanistan.
The compromise measure also heeds Obama's call to terminate the VH-71 replacement helicopter program for the presidential fleet. The program is six years behind schedule, and estimated costs have doubled to more than $13 billion.
The $680 billion measure doesn't actually fund the Pentagon's budget but provides policy guidance that is typically followed closely by the appropriations committees.
It also approves Obama's $130 billion request to conduct the wars in Iraq and Afghanistan.
The legislation approves a 3.4 percent pay raise for military personnel, a half-percentage point over the president's request.
The measure also prohibits any transfer of detainees held at the Guantanamo Bay prison into the US until 45 days after the Obama administration submits a comprehensive plan for closing the controversial prison.
Republicans were irate that the so-called hate crimes legislation was attached to the bill. It would give people attacked because of their sexual orientation or gender federal protections and significantly expands the reach of hate crimes law.
The measure also would make it easier for federal prosecutors to step in when state or local authorities are unable or unwilling to pursue hate crimes.
"I'm in a dilemma today," said Rep. John Carter, R-Texas, adding that enclosing the hate crimes legislation in a bill supporting the U.S. military would force people to vote against their beliefs.
"I is simply inappropriate to use a defense bill as a vehicle for divisive, liberal social policies, wholly unrelated to our countrys national security," said Rep. Mike Pence, R-Ind.