A divided federal appeals court panel here yesterday set aside a Federal Communication Commission order that banned seven words from the airwaves when children might be listening.

The words - ranging from three to 12 letters in length and describing various sexual activities, portions of the female anatomy or excretory functions of the human body - were aired in December, 1973, by a New York radio station when it broadcast a record of a comedy routine by comedian George Carlin.

After an adult complained that he and his young son had overheard portions of the afternoon broadcast while driving through the city, the FCC issued an order on Feb. 12, 1975, banning the broadcast use of such words in the future "when there is a reasonable risk that children may be in the audience."

The U.S. Circuit Court Judge Edward A. Tamm said the FCC order was too broad and carried the agency into the "forbidden realm of censorship."

Tamm added that, if literally interpreted, the ban on broadcasting the words would prohibit the airing of certain Shakespeare plays, portions of the Bible, works of a long list of prominent authors, "and the Nixon tapes" - a reference to the secretly-recorded and profanity-laced White House tapes of former President Nixon.

"The dial scanner may avoid exposure simply by turning the dial," Tamm said. "The commision's order is a classic of burning the house to roast the pig."

Rejecting an argument by the FCC that "filth will flood the airwaves" if it does not have such a rule, Tamm said communities have a way of making their protest known through public uproar if they don't like such language on the airwaves.

He said the FCC must "trust the [stations] to exercise judgment, responsibility and sensitivity to the community's needs, interests and tastes."

Tamm said the FCC order was so broad that it could not be enforced and there was no need to reach the larger issue of whether the commission ever could make a similar ban that would withstand a court challenge.

Chief Judge David L. Bazelon, who concerned, said he would go further and rule the attempt by the FCC to limit the use of certain words on the air as unconstitutional on First Amendment grounds.

He said the FCC "simply recorded its conclusion that the words were indecent" without looking to any expert testimony or relying on widespread complaints or letters of protest.

He said that although some parents may properly want their children to avoid hearing certain words, it is improper for the federal government to attempt to justify censorship on the basis of atempting to help those parents.

The chief judge said he was not "championing the 'cause' of indecent speech" and said the use of "dirty words on the air, like the prevalence of violence, is a serious concern." However, he pointed out that the commission recently refused to ban violence on television because of the First Amendment problems it saw in doing so.

U.S. Circuit Court Judge Harold Leventhal, whose opinion included a recitation of the FCC order that listed the seven words and also included a reproduction of the Carlin routine that was broadcast, said he would uphold the FCC order.

He said the words were "indecent" in terms of recent obscenity rulings by the Supreme Court and that the FCC had not attempted to become a censor but merely to regulate when such words should be used over the public airwaves.

Carlin, a comedian who expanded his act several years ago to include biting counter-culture humor and satire, uses the monologue in his nightclub act to question society's attitude toward language in general. He was once arrested and acquitted on charges of disorderly conduct in Milwaukee for performing the same routine.

Carlin, reached in Los Angeles last night by telephone, described the monologue as a "growing and changing piece of of material" that is still an integral part of his act.

He said his first attempt with any comedy routine is to "try and amuse" his listeners. "I'm not a crusader. I'm pretty much of an onlooker. I'm trying to say these words are essentially harmless . . . and hold them up to the light," he said.

He said he doubted if the appeals court decision would work its way into his performances because "someone might think I'm bragging."