THE AIYER family might be said to park its friends in the garage.

Not that it looks like a garage anymore, you understand. Now it's the lower part of a dramatic, light-filled two-level party/family room addition.

In the beginning, it was one of those classic design mistakes, a case of misplaced values. The house was not so big but the garage was enormous. That might have been okay in the days when houses were only a place to park your car.

But now, the great American craze for automobiles seems to have run out of gas. Today, with the price of gas and the difficulty of finding it, people are spending more time at home. Their home has become the place where they show who they are and what they think is important. And they want that home to have all the zing and the pizazz they used to look for in the two-tone, chrome-plated, white sidewall tire and sun roof jobs.

The garage was never that useful, even when it was new. It's tucked under the dining room, on the house's lower level. The house is built on a hillside, so the garage wasn't that far from the garden level. But trying to maneuver a car into the garage from the side driveway was not that easy.

When Jean and Sri-Ram Aiyer hired architect Harry Montague to help them find more room, the garage was an obvious place to look. It was hard to see -- the room was dark and garagey, rarely seeing the light of day. It had two great advantages, though. It was big -- 20 by 20 feet. On the other hand, Jean Aiyer is not one to entertain people in the basement, unlike some people who give you the feeling you're not neat enough for their living room.

Every two years, when the Aiyers and their daughter go on home leave to Hyderabad, India, they enjoy the easy way friends pop in and out of the family compound.

"People take a walk down the street and stop in to visit without invitations or calling ahead," Aiyer said while showing off the addition to two visitors, on a bright cool day when the sun sparkled against the glass. "The children enjoy it because they're always offered sweets." And he offered candy from a box of English chocolates to his visitors.

His wife added, "The children are never bored. If someone's busy there's always someone else to pay them attention. We enjoy that way of life."

The Aiyers had that sort of thing in mind when they called upon Montague to design an addition to their house. The solution is interesting to anybody who has dogs, children and friends, and a house too small to accommodate all of them.

"We picked this street in the Palisades in 1977," said Jean Aiyer, "We bought the house for the street. Actually I thought it was the ugliest house on the block. But we love the street because there are so many children, of all ages and sizes. Our daughter Sian is 10 (and there's another one coming along soon). We wanted the addition so children and the dog could come in and out of the house when they liked, without worrying about polished floors and such."

Montague's solution was to link the living and dining room upstairs to the basement with a 20-foot-high addition. The new room is almost a glass circle. Sliding glass doors with fixed glass above make the circle. Montague pulled a clever one on the sliding doors -- he used 4-by-4 wood mullions to frame each half of the metal sliding door units. "The effect is much more formal and orderly than the standard sliding door," Montague said. "It also helps to detract from the 2-inch or so difference in plane between the two halves of a door unit. I think the mullions help to make the modern addition more compatible with an older house."

Most of the glass faces roughly south, the ideal orientation for light and winter time solar collecting. In the summer, trees and planting help to shelter against the hot sun. The Aiyers installed an auxilary heating and air conditioning unit for the new room, with outlets in the floor and ceiling. But so far, the house's old central air conditioning has functioned fine.

"Being able to slide open 50 percent of the wall has made the difference," Jean Aiyer said.

Outside, a set of wide curving brick steps leads down to the garden. Inside a dramatic curving staircase links the living room to the glass room. A large overlook from the dining room turns it into a balcony of the new room.

"It works very well at parties," said Jean Aiyer, "people hear the conversation below and naturally gravitate downstairs. They don't feel isolated.

The two-story-high room is a few steps up from the old garage. To link the two rooms, the existing outside wall of the garage had to be removed and a steel beam put in to bridge the gap. (The workmen thought it would take two days to tear it down -- it took a week.)

The old garage is now an intimate sitting area. It seems more sheltered than the round glass room, but borrows its light from the taller area. Where the old garage door was is now a set of bookcases. Fixtures set into a dropped trough provide light for reading. The upper and lower level of the new room are furnished with a handsome set of sofas and chairs, bought when the Aiyers were in Afghanistan on a World Bank assignment in 1971. (Aiyer is now a World Bank division chief for the Middle East and Europe.) The two sofas and four or five chairs cost $20 -- "and that was the foreigner's price" said Aiyer.

Here, as in many placed in the house, are elaborate fabrics embroidered in Aiyer's India. The white walls show them off well. The floors in the circular level are quarry tile. A gray wall-to-wall carpet covers the more intimate sitting room on the lower level.

The front of the house had always bothered Sri-Ram Aiyer because of its boxy, flat roof look on a street of richly detailed pseudo-Federal houses. So while they were at it, they put in a curving walk and added two small bays, one a window on a dark stair, the other a dining alcove in the kitchen. And she had one of the three kitchen doors closed to make a place for the sink. The cabinets -- including a long narrow one for the many herbs and spices needed in the rich Indian cooking -- were all painted blue. Aiyer brought hand painted tiles from Portugal for the countertops. The tiles, appropriately, are blue and curry colored.

"My wife is a good Indian cook," said Aiyer.

"I had to learn," she said. "Indian men don't cook. But Sri-Ram's sister stayed with us for a while, and I learned from her. I really enjoy eating it."

Jean Aiyer, who works for Art Buchwald, met Sri-Ram Aiyer when he was teaching Russian nights in London. She's originally from Wales. They married, and came to Cornell University where she worked for Carl Sagan, the science writer while Aiyer got his doctorate. He went on then to work for the World Bank.

Economist Aiyer figures the remodeling cost about $40,000, including the architect's 10 percent of construction costs fee, $2,000 for the extra air conditioning, $1,200 for the carpeting and about $800 for the quarry tiles.

Sam Yoon of Eastern Construction Company was the contractor. Montague thought Yoon and his carpenters did a good job on the unusual round trim on the curving sun room. The wood trim had to be scored, wet and bent to fit around the spandrel. Another contractor who bid on the job took a look at that curve and said, "I'm too old to learn how to do that."