By Maggie Fox, Health and Science Correspondent

WASHINGTON (Reuters) - U.S. health officials said on Friday they have confidence in their plan to immunize 400,000 emergency workers against smallpox and were taking into account worries about side-effects from the vaccine.

Earlier on Friday an Institute of Medicine panel recommended that the plan move slowly, and questioned loopholes about who pays when people inevitably become sick, disabled and even are killed by the vaccine.

The plan is to quickly vaccinate upward of 400,000 "first responders," and eventually millions of health workers, police and firefighters. Half a million military personnel began getting the vaccinations in December.

Centers for Disease Control and Prevention Director Dr. Julie Gerberding said 11 states, which she declined to name, asked for shipments of vaccine starting next week. This suggests they can start on or soon after January 24, the day that legislation covering the program goes into effect.

"We have requests for over 50,000 doses of vaccine," Gerberding told a telephone news briefing.

She said it is important to get started soon. "We are in fact in a dangerous world where the chance of a terrorist attack with smallpox is possible," she said. "We must be prepared."

It is up to each state to decide when and how to start vaccinating workers, and Gerberding said every state had submitted a plan for doing so.

"We are not going to delay this program because of concerns about compensation," she said.

ENCOURAGE DISSENT, SAYS PANEL

The report from the Institute, which advises the federal government on medical matters, said the process should encourage workers who have doubts to decline to be vaccinated, thus sending a clear message to the government about what questions need to be answered before the plan is widened.

It noted that people would be acting out of altruism and said special care should be taken to protect them. It also said no one knows what kind of side effects will be seen and the CDC needs to keep a careful eye out.

"People need to feel entirely free to say 'No, I won't get vaccinated'," Alta Charo, a professor of law and bioethics at the University of Wisconsin, told a telephone briefing.

Gerberding said the plan was clearly voluntary and included provisions for "live monitoring" and for educating volunteers. "We have literally engaged in countless hours of preparation for this endeavor," she said.

Smallpox was eradicated worldwide in 1979 but several countries, including the United States, have stocks of the virus that could be used to make weapons.

The vaccine that wiped out smallpox is old and causes many side effects. It kills between one and two in every million people who get it, and Americans may be more vulnerable to side effects than in the 1970s when general vaccination ended.

But the Bush administration decided the risk was worth taking in view of the possible threat of biological attack. The CDC asked the Institute to take a look at the plan.

The Institute panel raised many issues that labor unions and other groups have -- that the plan does not say what happens to people who get sick. Not only are the vaccinated workers at risk, but so are people they come into contact with in the first two weeks after being immunized.

This is because the vaccine uses a live virus related to smallpox, called vaccinia.

Health officials have said volunteers will have to rely on their own insurance, worker's compensation or perhaps mechanisms put in place by their own employers.

Unions, the American Nurses Association and other groups have urged a delay in the program until such issues are addressed. Congressional Democrats, including leaders of the House and Senate, wrote a letter to Bush on Friday asking him to work with Congress to create a compensation plan.

The CDC's top vaccination expert, Dr. Walt Orenstein, acknowledged that there is no provision for someone who may be made sick by contact with an immunized person. But he said the plan calls for covering the vaccine site with gauze, which should reduce the risks.