The American Library Association yesterday awarded the 1985 John Newbery Medal for the most outstanding children's book of 1984 to Robin McKinley for "The Hero and the Crown." The Randolph Caldecott Medal, honoring the most distinguished American picture book, went to "Saint George and the Dragon," illustrated by Trina Schart Hyman and retold by Margaret Hodges.

The ceremony was something of a playful affair. The Newbery committee members made their announcement at the Sheraton Washington Hotel here while wearing paper crowns to honor McKinley's novel. The head of the Caldecott group, not to be outdone, carried a sword and bowed as she announced her winner: "Saint George and the Dragon."

The Pulitzer Prize may be better known, and the PEN-Faulkner more trendy, but for true literary immortality it would be hard to beat these two medals for children's literature. Of the 112 books that have won these awards since 1922, only four are out of print.

Librarians hand out bookmarks listing the honored titles; book shops stock them reverently; some parents and grandparents buy them every year for birthdays or Christmas. Best of all, winners such as Maurice Sendak's "Where the Wild Things Are" and Hugh Lofting's "The Voyages of Doctor Dolittle" pass into the mythology of childhood. And once there, they are never forgotten.

Besides the two principal winners, the ALA also named three honor books -- in essence, runners-up -- for each prize. The Newbery Honor books were "Like Jake and Me," by Mavis Jukes (Knopf); "The Moves Make the Man," a first novel by Washington writer Bruce Brooks (Harper & Row); and "One-Eyed Cat" by Paula Fox (Bradbury). The Caldecott Honor titles were "Hansel and Gretel," illustrated by Paul O. Zelinsky, retold by Rika Lesser (Dodd, Mead); "Have You Seen My Duckling?" by Nancy Tafuri (Greenwillow); and "The Story of Jumping Mouse," by John Steptoe (Lothrop, Lee and Shepard).

"The Hero and the Crown," the Newbery award winner, chronicles the adventures of Aerin in the realm of Damar, as she quests for the truth about her parentage, encounters the wizard Luthe, gains the magical sword Gonturan and finally faces the evil mage Agsbed. Set in the same world, but centuries earlier, as her 1983 Newbery Honor book, "The Blue Sword," the new novel confirms McKinley as an important writer of modern heroic fantasy, a genre whose giants include C.S. Lewis, J.R.R. Tolkien, Ursula Le Guin and Lloyd Alexander. This year's Newbery winner was published by Greenwillow.

In the Caldecott winner, Trina Schart Hyman illustrates the legend of Saint George and the Dragon, capturing the brocaded richness of Spenser's vision -- in the "Faerie Queene" -- of the Red Cross Knight who quests after and eventually does battle with a malevolent dragon. Not only does he win the favor of the Fairy Queen, but he also becomes the patron saint of England. With appealing whimsy, the margins of the pictures are laced with traditional English flowers. Specializing in fairy tales, Hyman has also illustrated "Snow White," "Sleeping Beauty" and "Little Red Riding Hood," the last a 1984 Caldecott Honor book. This year's Caldecott winner was published by Little, Brown.

Two 15-member committees, officially established a year ago at the ALA's midwinter meeting and chosen from members of the Association for Library Service to Children, were responsible for the awards. The balloting is a complicated system of weighted votes, in which each person votes for three books; the winner must appear as a first choice on at least eight ballots. Julie Cummins, chair of the Newbery committee, said that at the beginning of the deliberations "well over 100 books" were among the serious contenders. Karen Nelson Hoyle, chair of the Caldecott, said that her committee spent four days judging among 250 titles.

According to the Cheshire Cat, a book shop specializing in children's literature, both winners have sold very well in Washington, as has Paula Fox's Newbery Honor title "One-Eyed Cat." It is the story of a young boy who fires an air rifle one evening and believes that he has put out the eye of a stray cat. Fox is a popular writer for both adults and children (as well as a previous Newbery winner for "The Slave Dancer").

Bruce Brooks' "The Moves Make the Man" has been popular locally; it recounts the relationship of a black boy and a white boy, focusing on the latter's inability to appreciate basketball because he finds it characterized by "dishonest" feints and moves.

The American Library Association represents about 39,000 members who work in public, academic and private libraries. Besides choosing the Newbery and Caldecott award winners, the ALA also compiles influential lists of the most notable movies, recordings and film strips for children and young adults.