The Levi's price war escalated this week from a few isolated shopping center skirmishes to a fierce retailing battle among Washington's major jeans' powers.

Pants Corral, whose 26 stores make it the largest Levi's retailer in the area, yesterday announced it is dropping the price on denim and corduroy pants by 25 to 40 per cent. And a spokesman for The Gap, which also specializes in Levi's, told The Post its chain of 7 local stores would probably cut prices to meet the competition.

And so Washington enters the fray over how much to charge for the pants Levi Strauss introduced to California gold miners more than 100 years ago. The price war has been raging nationwide since June when County Seat Stores, a 172-unit chain based in Minneapolis, started selling Levi's under the recommended retail price.

Jeans which had been selling at $16 to $17 per pair can now be had for $11.50 to $12.50. The difference in price is being absorbed by the retailers.

Levi Strauss & Co., the San Francisco-based firm which makes and markets the pants worldwide, still charges roughly $8.50 per pair wholesale. The company says it has no plans to lower the base price.

Several Washington clothiers with limited Levi's in stock dropped their prices last month, hoping to steal some jeans sales from major retailers. But the move which finally drew Pants Corral into the fray was, according to a company spokesman, the opening Monday of a discount store called Zipper's on Route 7 near the Beltway - reputed to be the largest single outlet for Levi's in the world, with an advertised inventory of 25,000 pairs.