An anti-sprawl bill approved Friday by lawmakers directs the state to curb its encouragement of “dumb growth.”

The bill, passed by both the Senate and Assembly, discourages, but does not prohibit, state agencies from investing in developments that might lead to sprawl.

It requires agencies to establish advisory panels to evaluate each project’s compliance with anti-sprawl criteria and, when they do not, to explain why state funding continues.

Critics say sprawl strains local government services and eats away at valuable green space.

“The cost of sprawl, to government and the taxpayer, is huge,” said Assemblyman Sam Hoyt, D-Buffalo, who sponsored the bill.

Supporters say the state should focus its investments on already developed communities to preserve the environment and save taxpayers’ money.

“We have a shrinking population and a shrinking economy but a dramatic increase in developed acreage,” Hoyt said. “That’s the worst kind of sprawl.”

Hoyt says he hopes the measure will stop a wide range of state agencies, such as the Transportation and Education departments, from investing in projects that encourage so-called “dumb growth.”

The legislation, which now goes to Gov. David A. Paterson, encourages those agencies to fund infrastructure projects — roads, bridges, schools and other developments — that are consistent with smart growth.

“It takes a place like Buffalo and says we’re not going to let it sprawl out of control,” said Peter Fleischer, executive director of Empire State Future, a coalition of groups supporting smart growth.

Fleischer says the bill is essential

to ensuring the state spends its limited infrastructure funds on projects that help, not hurt, local communities.

Of course, not everyone considers sprawl a problem, especially in Western New York, where the number of new houses often pales in comparison with high-growth areas such as Atlanta and Las Vegas.

Smart-growth critics, most notably home builders, often argue that restricting development also means limiting choice and opportunity for homebuyers.

They also suggest that what some smart-growth advocates really want is a way to stop development.

“They may talk ‘smart growth,’ but they really mean ‘no growth,’ the New York State Builders Association said in a statement last year.

Whether Paterson would support or oppose the bill remained unclear Friday, although smart-growth advocates suggested he would back it.

“We’re confident the governor will sign it,” Fleischer said. “This is a governor who’s philosophically in line with this bill.”