The Consumer Product Safety Commission expects to start testing new materials within two weeks that it hopes will greatly reduce the risk of upholstered furniture catching fire from accidently dropped cigarettes.

If the tests prove successful, industry representatives told the commission yesterday, new fire resistant furniture could be on the market by next June or July. While applauding the industry's goal, the commission's program manager for fire hazards, James Hoebel, called it ambitious and raised doubt that it could be met.

Nonetheless, commission Chairman Nancy Harvey Steorts said preliminary tests indicate that the new ways of reducing the flammability of upholstered furniture could be "a real breakthrough" in the six-year battle to reduce the 500 deaths a year caused by cigarettes igniting chairs and couches. As long ago as 1978, the commission staff recommended tough, new flammability standards, but last October the CPSC postponed any move to require the industry to make fabrics more flame-resistant in favor of a voluntary effort.

The industry's Upholstered Furniture Action Council, which represents the makers of 88 percent of the furniture sold in this country, acknowledged failing to meet targets set by the commission last year. But UFAC Cochairmen Charles Carey and William S. Richman insisted that, as a result of industry efforts, American furniture "is safer and is growing in safety" each year.

The Citizens Committee for Fire Protection, however, asked the commission to insist that the industry submit furniture for tests by next March to add a degree of urgency to the voluntary program. In a letter submitted to Steorts, Committee President Arthur C. Delibert said tests a year ago "were disastrous," with 51 percent of the furniture catching fire from smoldering cigarettes.

The new fire retardant materials, developed by the industry, include placing a narrow strip of aluminum foil in the welt, or rounded seam that runs along the edges of most upholstered furniture. This small piece of metal acts to dissipate the heat in one of the most common spots for fires to start from dropped cigarettes -- crevices between cushions -- explained Joseph Sharman, a CPSC fire safety officer.

Second, Sharman said, fires can be thwarted further by replacing the tightly woven material generally used as an inner wrapping under the upholstery with artificial fibers that tend to resist igniting more.

Combining these two in a piece of furniture can reduce the possibility of its catching fire by as much as 90 percent, Richman told the commission.

The commission staff will begin testing these new materials by building mock-ups of furniture pieces and dropping burning cigarettes on them to see how they resist fires. If these tests are successful, Hoebel said, the CPSC will build full-size furniture to see further how the materials act.