ALBANY -- Both sides blinked.

Senate Republicans' campaign arm withdrew a challenge Wednesday to a subpoena issued by Democratic Gov. Andrew M. Cuomo's hand-picked corruption commission after it narrowed the scope of its inquiry.

State Capitol insiders saw the agreement as a signal that temperatures are cooling a bit in a fight over possible changes to the state's campaign-finance laws.

The Senate Republican Campaign Committee disclosed Wednesday it "voluntarily discontinues" a petition it had filed asking a court to quash a subpoena issued by Cuomo's Commission to Investigate Public Corruption, informally known as the Moreland Commission. The GOP had contended the subpoena for campaign records was overly broad, violated constitutional separation-of-powers provisions and would have provided Democrats a look into the party's internal strategic workings.

"After we contested the subpoena in court, the Moreland Commission proposed to narrow very significantly the scope of its subpoena," Republican lawyer Michael Chertoff said in a statement. "Among other things, the commission withdrew entirely its demand for internal party communications. In light of the commission's offer to withdraw most of its demands, the SRCC has agreed to produce a limited set of documents reflecting financial records and certain external communications associated only with the committee's housekeeping account."

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The commission co-chairs, Nassau County District Attorney Kathleen Rice and Onondaga County District Attorney William Fitzpatrick, issued a statement saying, in part: "Cooperation and reason prevailed and we look forward to continuing to work with the SRCC on this matter."

Cuomo, in a radio interview, called the Republicans' decision the "right thing to do."

The Democratic Assembly Campaign Committee had previously complied, officials said.

The decision Friday doesn't necessarily impact action on subpoenas the commission sent to 32 state legislators seeking information on their outside incomes. Last week, Assembly Speaker Sheldon Silver (D-Manhattan) and Senate co-leader Dean Skelos (R-Rockville Centre) called those subpoenas an "abuse." and said the Cuomo commission was trying to "coerce" them into supporting public financing of political campaigns.