By James Vicini

WASHINGTON (Reuters) - The Supreme Court said on Monday it would decide whether broadcasters can be fined for showing nudity or airing a single expletive blurted on a live television show.

The justices agreed to review a ruling by an appeals court in New York that struck down the Federal Communication Commission's (FCC) indecency policy as unconstitutionally vague.

The Obama administration appealed to the Supreme Court, saying the ruling prevented the FCC from effectively enforcing broadcast indecency restrictions and strongly defending the policy as constitutional.

The appeals court ruled broadcasters could not be fined for expletives by singer Cher and actress Nicole Richie on awards shows that aired on News Corp's Fox television network or by U2 lead singer Bono on a different network awards show.

It also threw out $1.21 million in fines for a scene showing a woman's nude buttocks on an "NYPD Blue" episode shown on Walt Disney Co's ABC television network.

All the incidents occurred in 2002 and 2003.

The FCC launched a crackdown on indecent content, including one-time use of profanity on live television when children are likely to be watching, after pop star Janet Jackson briefly exposed her bare breast during the 2004 broadcast of the Super Bowl halftime show.

Government lawyers have said the indecency policy covered so-called "fleeting expletives" such as the "F-word" and the "S-word" that denote "sexual or excretory activities," respectively.

The policy applied only to broadcasts. Neither cable nor satellite channels are subject to FCC content regulation.

Broadcasters challenged the policy on free-speech grounds under the Constitution's First Amendment and said it had "a severe chilling effect" that amounted to censorship of legally protected expression.

They said the FCC has inconsistently enforced the policy, allowing the television broadcast of the World War Two movie "Saving Private Ryan" even though it had the same expletives.

It marked the second time the justices confronted the issue. In 2009, the high court by a 5-4 vote upheld the policy as rational, but did not decide its constitutionality.

The justices are expected to hear arguments in the case and then rule during their upcoming term that begins in October.

The Supreme Court case is FCC v. Fox Television Stations, No. 10-1293.

(Reporting by James Vicini; Editing by Vicki Allen)