There is an office in the U.S. Department of Housing and Urban Development where English is spoken.

It has chintz-covered furniture, a Mad Ludwig II toy castle and an energetic, young occupant named Donna E. Shalala.

The title on the door reads "Assistant Secretary of Policy Development and Research," a title which, only a year or two ago, would have scared the horses on the streets. Today, thanks to Shalala, every people with horse sense are beginning to find HUD research helpful. And that, in time, may have beneficial influence on the declining urban research industry out there in academe.

"The first thing we did when we got here with the Carter administration was to clear out a lot of - well, mush," said the assistant secretary, pleased with having found the mot juste .

"We had to narrow the scope of our work," she explained. "My focus is on quality." She hired bright new people so that her office is now able to provide quick answers for the president and the secretary of housing and urban development. "We have been able to respond to policy questions - about solar energy or neighborhood attitudes, for instance - in 24 hours," Shalala said. "In fact, we have been criticized for responding too fast."

Shalala believes that government research should be confined to immediate, practical problems of direct concern to government. Her staff and contractors are, among other things, evaluating HUD programs as soon as they get under way - not only when they get in trouble.

Her office has recently issued a number of readable studies and pamphlets on various aspects of housing, displacement due to the reclamation of deteriorated neighborhoods, community activities and local government. They all stress self-help. One publication tells local governments how to assess the impact of urban change on jobs and development.

Shalala also sponsors some urgent "hardware" research. She is particularly concerned with the impending water shortage in some cities and her office is working on water conserving gadgets such as new shower heads. Another new hardware item under research and development is "flat wire " that can be applied to building exteriors. It will save on costly electrical engineering and installation.

But as important as any of these redirected efforts for better housing and urban development is shalala's effort to have her staff speak and write plain English.

Shalala was appalled when she first read the letters prepared for her signature. Encouraged by President Carter's seemingly forgotten pledge to make English again the official language in this country, Shalala called-whom else?-her old English teacher.

Ruth Limmer, who taught Shalala at the Western College for Women in Oxford, Ohio, and had meanwhile become head of the English department at Goucher College, is still purging gobbledegook in Shalala's office with verve. She edits most of the material that goes out and, as she puts it, tries to give the staff courage to write "I" in their letters rather than hide their identity and their convictions, or lack of them, under a cowardly shroud of B.S., or Bureaucratic Style.

All this is a far cry from conventional urban policy development and research both within HUD and in hundreds of now defunct urban institutes and centers that mushroomed all over the country in the wake of the mid-60s riots. The industry consumed millions of doctorate manhours and even more tons of paper, mostly with variations of the then-fashionable "think tank" can't about "game planning," "cybernetics," "systems analysis," "simulation models" and other computer fun. But it was absurdly devoid of any insights into living people and dying cities.

The wizardry worked no better in the urban scenario than it did in the jungles of Vietnam, and a year or so aog, its primary financial lifeline, the Ford Foundation, turned off the spiggot. Program office William Pendelton came to "the bleak conclusion" that the idea was undoubtedly oversold and thus generated "unrealistic expectations."

Pendelton added that "it was never clear what the target was and little or nothing was therefore specified, let alone measured."

Shalala, it seems, was too young, as well as too smart, to let the computer wizardry impress her unduly. She was born of Lebanese parents in Cleveland. In 1962 she graduated from Western College and marched straight to the Peace Corps in Iran, then Columbia University, Yale Law School, the City University of New York and Syracuse University, collecting honors along the way.

Her specialty is scholarly research and government financing. Before joining HUD she was director of Big Mac, The Municipal Assistance Corp., created to solve New York City's financial problems.

"I am basically an academic," says Shalala, implying that politics is just a matter of a good citizen's wholesome interest. Her academic approach is often stunningly unconventional.

To draw up standards for energy efficient buildings for the Department of Energy, she asked some 3,000 architects to review their plans for recently buildings and state what they would do differently today in light of the energy crunch. A summary of these ideas yielded a realistic basis for new standards.

Building industry spokesmen complain, however, that Shalala "knows nothing about construction, building technology and the real problems of the industry." One of them said, "Her concern for new shower heads and leaking basements just is not enough."

Calvin Hamilton, the city planner of Los Angeles, on the other hand thinks Shalala "extremely bright, vigorous and tough."

"She obviously bruised some toes shuffling research priorities," Hamilton said. "I guess she is more interested in good ideas than big grant applications."

Marietta Tree, the former U.S. ambassador to the U.N. and now a prominent city planner, who worked with Shalala at the New York State Constitutional convention, says of Shalala, "It is just wonderful how she can handle any job with so much spirit and all that incredible energy.

"Those machine-gun answer?" raves Tree.

"I don't think I ever gave Donna an A in college," says teacher Limmer. "But I would give her an A-plus now." CAPTION: Picture, Donna Shalala