Mexico's bid to reduce its $53 billion foreign bank debt through a new offering of U.S.-backed bonds drew a meager response from its creditor banks, the Mexican government reported yesterday.

The Mexican plan, initially hailed as a potential breakthrough in the Third World debt crisis, will result in the retirement of only $1.1 billion of the country's debt -- far less than Mexican and U.S. authorities had anticipated when the plan was unveiled Dec. 29.

"They are going to put the best face on this, but the response was not what they expected," said a U.S. official in Mexico City.

The outcome is also a disappointment for Morgan Guaranty Trust Co., the giant New York bank that helped devise the plan as an innovative way for a developing nation to reduce its debt load without repudiating its obligations. Morgan officials declined to comment.

Under the plan, Mexico sought to induce banks to forgive a portion of their loans by offering, in exchange, smaller quantities of Mexican government bonds that are backed by collateral consisting of U.S. Treasury securities. Banks were asked to make auction-style bids for the bonds by offering to cancel their loans at a discount -- say, $1 worth of loans for 60 cents worth of bonds.

The Mexican Finance Ministry said it had received bids from 139 banks in 18 countries. It rejected nearly half of the bids as insufficiently attractive, and accepted bids to retire $3.66 billion in debt at an average discount of 67.77 cents on the dollar, offering $2.56 billion worth of bonds in exchange.

The net result -- $1.1 billion in debt extinguished -- is considerably below the $5 billion to $10 billion that some Mexican officials and economists had initially hoped for, and is also below more modest estimates that bankers and analysts made in recent days.

Yesterday's development may heighten acrimony between Latin debtors and their creditor banks. The government's announcement prompted renewed calls for a comprehensive solution to the debt crisis that would require banks to forgive a substantial portion of their Third world loans.

"Chipping away at the debt with market-oriented mechanisms ... clearly does not work," said Jorge G. Castaneda, an analyst at the National Autonomous University of Mexico.

But U.S. officials in Washington maintained that the result of the Mexican plan offered grounds for encouragement. A Treasury official said the Mexican plan "was never envisioned as a solution to the debt problem," adding that the debt-for-bonds offer had been successful enough to establish the concept as a "useful item on the menu of options" for easing the crisis. "I don't think you've seen the last of this kind of approach," the official said, adding that "a few changes might increase its acceptance" among banks.

Sen. Bill Bradley (D-N.J.), who has advocated other plans to reduce the Third World debt burden, agreed, saying in a statement that the banks' refusal to exchange their loans at a higher discount showed "confidence in the {Mexican} government" to honor its debts. "That's not bad news; it's good," Bradley said.

The Mexican Finance Ministry said in a statement that the exchange successfully "established a precedent whereby it is possible for debtors to take advantage of the discounts" at which Third World loans are traded on the secondary market. The swap will save Mexico $2.645 billion in principal and interest payments over the next 20 years, the Finance Ministry said, while costing the government just $532 million for the zero-coupon U.S. Treasury securities it will buy to back up the bonds.

But the government's disappointment in the foreign banks' response was evident in private conversations with officials in Mexico City this week and underlined further by the terseness of the press bulletin that announced the results. The Finance Ministry canceled plans for a press briefing about the bond swap yesterday, and senior ministry officials were unavailable for further comment.

Mexican sources said one faction in the government argued for killing the whole swap program and demanding a new debt relief mechanism.

The smaller than expected response to the debt reduction plan comes at a delicate time for Mexico. The price of oil, Mexico's principal export, is falling just as the government is introducing a new economic program designed to stop inflation and eliminate its budget deficit. A significant cut in debt servicing costs is seen by many officials and economists as essential to the program's success.

Some big U.S. "money center" banks have said that they wouldn't participate in the Mexican plan because they regarded it as tailored primarily for small, regional banks that want to sell off their Third World loans and get out of the international lending business. But another reason that big U.S. banks are reluctant to forgive a substantial portion of their Third World loans is that they aren't financially strong enough to do so.

Special correspondent William A. Orme Jr. in Mexico City contributed to this report.