House Democrats yesterday unveiled a proposal that would take $100 million out of the defense budget and use the funds to provide retraining and other assistance to the hundreds of thousands of workers expected to be displaced by major defense budget cuts.

Under the proposed economic conversion package, another $100 million would be used to help communities develop nonmilitary industries.

Economic conversion, a concept that once found few supporters outside the anti-war movement, recently has been embraced by Democrats concerned that their support of defense cutbacks could prove a political liability if it means massive layoffs back home. At yesterday's press conference, Democratic senators and governors joined with a number of House Democrats in stepping up to the microphones to endorse the concept.

Rep. Nicholas Mavroules (D-Mass.), a member of the House Armed Services Committee and one of the key sponsors of the bill, declared that putting in place a program to help the nation convert to a peacetime economy "is probably the most important post-Cold War legislation we will pass this year."

The package that was unveiled yesterday was a compromise proposal, worked out over several months by a group headed by House Majority Leader Richard Gephardt (D-Mo.), Rep. Mary Rose Oakar (D-Ohio), the chief sponsor of the bill. Several other Democrats predicted that the House would act on a bill this year, although the measure must pass several hurdles, including referral to six committees. The proposal is expected to run into the most problems in the House Armed Services Committee and the Ways and Means Committee.

Senate Democrats also are developing an economic conversion package, but that proposal is not expected to be completed until this summer. Several Democrats said they expect the Bush administration to oppose the economic conversion effort.

The House Democratic package would help displaced employees maintain their incomes by extending unemployment compensation by 26 weeks, a highly controversial provision. Opponents fear that it would significantly increase the cost of the program. Some House Democratic sources acknowledged that there is probably not enough money in the bill to fund it. They say conservative estimates are that the unemployment compensation extension provision would cost $200 million to $400 million alone the first year.

On the other hand, labor groups are urging Democrats to adopt a more ambitious plan, arguing that unemployment compensation, which pays an average of about $150 a week, is insufficient for higher-paid defense workers. Rep. Ted Weiss (D-N.Y.) is expected to offer an amendment on the floor that would raise the sum that workers are paid. A spokesman for Weiss said details of the proposal are being worked out with unions. Weiss said yesterday that the economic conversion package could eventually cost as much as $2 billion to $3 billion a year.