"No Pets Allowed . . . visiting pets may not enter the building," reads the sign at a Rockville apartment building offering subsidized housing for the elderly.

Resident Joan Smith (not her real name), 75, believes that sign means what it says: Last year she reluctantly gave away to friends her only companion, a 6-year-old cat named Baby.

"She was afraid she'd have to have the cat put to sleep," says Shayla Saltz, also of Rockville, who agreed to take the cat.

"She was terrified that a maintenance person would come into her apartment and find the cat and they'd be put on the street with no place else to go. When she lived in another apartment, someone saw the cat in the window and the next day she received a letter telling her she and the cat had to be out in five days."

"It's not that we're opposed to pets," explains Bob Banes, division manager for Dreyfus Bros., which manages Heritage House, "but we have to think of the building and of the tenants. Pets can really create problems with noises and odors and they can make an unholy mess."

Joan Smith's story--like others increasingly making the rounds--does not have a happy ending. Elderly or not, you are going to have a tough time finding a place to rent if you have a pet.

"It's not that all landlords are blue meanies," says Charles Edson, attorney for the National Housing Manager's Association, "but the fact is, pets can and do create management problems, and an apartment owner doesn't want to have to go to court every time he wants to evict a dog. It's easier to ban all pets."

Blanket bans on pets in rental housing, however, are coming under increasing attack from a new coalition of humane societies and advocacy groups for the elderly. The former argue that responsible pet owners should not be denied pet ownership; the latter cite increasing scientific evidence that pets, especially for the elderly and handicapped, can improve significantly the quality of a person's life.

Pet bans, opponents argue, are nothing more than a subtle form of discrimination in housing and deserve to be struck down.

"Of course pets can cause problems in a building, but you have laws to deal with that," says Alan Beck, director of the University of Pennsylvania's Center for the Interaction of Animals in Society.

"How can you justify banning pets when most of the things we do in apartment houses could and are, in fact, perverted by some to be problems? You don't say that people in apartments can't have hi-fi's because 10 percent of the people with hi-fi's play them past 11 o'clock at night. Instead, you say people can have hi-fi's, but they can't play them loud."

While animal shelters continue to report case after case of people forced to give up cherished companions because they cannot find affordable housing that accepts pets, the hardest hit seem to be the elderly. All too frequently they find themselves living alone on fixed incomes and facing subsidized housing, only to be informed that they must give up their pets, sometimes the last living links to their families.

Ironically--as the connections between the elderly and their animals are being severed--doctors, psychologists and social workers studying the implications of the human/companion animal bond continue to demonstrate that the presence of pets can:

* Lower blood pressure.

* Reduce the mortality rate of heart attack patients.

* Alleviate serious depression.

* Reduce violent incidents, suicide attempts and medication needs in facilities for the criminally insane.

In studies of animals and the elderly, researchers have found that animals may help older people cope with their loss of dignity and self-esteem as well as maintain their sense of humor, all of which can lengthen a person's lifespan.

That irony hasn't been completely lost on legislators. Laws striking down pet bans in housing for the elderly and handicapped have been enacted in California and Arizona and are pending in at least four other states. (A similar bill failed to pass the Maryland legislature this year.)

At the federal level, legislation that would forbid federal funding for elderly and handicapped housing units that ban pets has been introduced by Rep. Mario Biaggi (D-N.Y.) and Sen. William Proxmire (D-Wis.). The bill is being backed by such diverse groups as The Humane Society of the United States, The White House Conference on Aging and The Delta Society, a nonprofit association of animal and health professionals.

While public-housing managers are concerned that passage of the federal legislation would create havoc in their facilities ("I'm getting more calls on the pet bill than on anything else," says the housing association's Edson), backers deny that allowing pets would turn public housing into zoos.

"Who says that pet necessarily means dog?" snaps Linda Hines, director of the People-Pet Partnership Program at Washington State University, one of the first so-called pet-therapy programs. "One of the most important parts of the legislation is that landlords can set reasonable guidelines for what kinds of animals can live in which buildings."

"The problem is that when these housing units say no pets, that means nothing, not even a goldfish," says Dr. Michael McCulloch, a Portland, Ore., psychiatrist and vice president of the Delta Society.

"What we're trying to do is suggest that there are much more imaginative ways that we can approach this issue. For instance, having pets in these housing units does not necessarily imply 24-hour-a-day ownership. Maybe you could have a career couple who could take their dog to an elderly person and leave it there for the day. Or you could give a person a bird or a fish instead of a dog or a cat. You just have to use common sense."

In an effort to bring pet proponents closer together with housing managers, the Department of Health and Human Services' Administration on Aging and the Department of Housing and Urban Development have given a $50,000 grant to the National Center for Housing Management to "provide managers with the training and management tools necessary to support independence and maintain a high-quality social and physical environment for the elderly."

The Delta Society is using part of that grant to formulate a program for housing managers aimed at sensitizing them to the health benefits of pets and assisting in the accommodation of elderly tenants who wish to maintain animal companions. McCulloch says he hopes the conference, scheduled for September in Washington, will result in the establishment of guidelines to satisfy both tenants and managers.

"It's been easy to say that pets are just problems," he says, "but it's a shame to see people disenfranchised this way. Pets have been indicted, tried and convicted and it's time to see a change."

For more information on the proposed federal legislation (HR 1373 and S 644) write Rep. Mario Biaggi, Room 2428, Rayburn House Office Building, or Sen. William Proxmire, 5241 Dirksen Senate Office Building.