  We have studied the color-suppressed hadronic decays of neutral B mesons into
the final states D(*)0 pi0. Using 9.67 million B-pairs collected with the CLEO
detector, we observe the decays B0bar -> D0 pi0 and B0bar -> D*0 pi0 with the
branching fractions BR(B0bar -> D0 pi0) = (2.74 -0.32 +0.36 +-0.55) 10^{-4} and
BR(B0bar -> D*0 pi0) = (2.20 -0.52 +0.59 +-0.79) 10^{-4}. The first error is
statistical and the second systematic. The statistical significance of the D0
pi0 signal is 12.1 sigma (5.9 sigma for D*0 pi0). Utilizing the B0bar -> D(*)0
pi0 branching fractions we determine the strong phases delta_I between isospin
1/2 and 3/2 amplitudes in the D pi and D* pi final states to be cos delta_I =
0.89 +- 0.08 and cos delta_I = 0.89 +- 0.08, respectively.
