OAKLAND — Mayor Ron Dellums placed City Administrator Deborah Edgerly on paid administrative leave until her July 31 retirement date Friday amid allegations Edgerly interfered with a police investigation.

Dellums' move came just three days after he joined Edgerly at a City Hall news conference to announce that Edgerly would be allowed to serve through the end of July, as the two had previously agreed, even as Edgerly faced mounting criticism.

Dan Lindheim, the city's Community and Economic Development Agency director and a close adviser to Dellums, will take over as acting city administrator.

Sources said that since Tuesday's new conference Dellums and Edgerly squabbled over the details of one condition of their agreement. That condition: that Edgerly would not have authority over the Police Department due to a possible conflict of interest.

Dellums wanted the police department to report directly to Lindheim, sources said, while Edgerly wanted police to report to Cheryl Thompson, the assistant city administrator who was Edgerly's closest City Hall adviser.

A letter Dellums sent Edgerly Friday said he made the decision regrettably.

"I did not want to have to exercise this option knowing that given the present environment people would interpret this as a judgment of guilt," he wrote. "I have assiduously stood in a posture of non-judgment, but delay in this matter will only further inflame this situation."

Edgerly could no be reached immediately for comment. She will continue to draw her $260,457-a-year salary through July 31, but will have no authority at City Hall.

City Attorney John Russo released the following statement: "Given the circumstances, and given the nature of the allegations confronting Mrs. Edgerly, placing her on administrative leave with pay is the simplest and most legally prudent course for the city to follow."

City Auditor Courtney Ruby, meantime, released a statement before Edgerly was put on leave saying she had "serious concerns that the administrator who is under investigation continues to have access to city assets."

In a letter she wrote Dellums dated Thursday she advised that, "the moment you become aware of an employee, at any level in the City of Oakland, is under investigation for felonious or other serious criminal actions, that employee should be immediately placed on administrative leave."

Federal investigators are trying to determine if Edgerly broke the law by tipping off her nephew about law enforcement's ongoing investigation of the West Oakland's notorious Acorn gang, sources said. Sources said she may have let him know about the police work following a June 7 incident where officers said they found a gun in a car driven by the nephew, William Lovan, 27.

Lovan works for the city as a parking meter repairman and is suspected to be a member of the Acorn gang.

Police learned about the gun June 7 through a monitored telephone conversation between Lovan and the gang's suspected leader Mark Anthony Candler, sources said.

The allegations of interference first came to light last week when police released a report revealing that Edgerly showed up on the scene at 1200 Market St. Edgerly asked why the car was being towed, police said. At one point, she said she was phoning Assistant Police Chief Howard Jordan and would be contacting Internal Affairs over the matter.

Edgerly has refused to discuss the allegations other than releasing a statement June 20 saying that press stories and rumors about her alleged role were "shocking" and "unfounded."

Edgerly, 56, was first appointed to her post on an interim basis in 2003 before taking over permanently in 2004.