Nancy Reagan called it her "special baby, grown to amazing size." And yesterday, she blew out the candles and sang "Happy Birthday" to ACTION's Foster Grandparents Program, which celebrated its 20th anniversary.

"It's really hard to say who benefits more in this program, the child or the foster grandparent," Mrs. Reagan told 53 "grandparents" from 50 states, Puerto Rico, the Virgin Islands and the District of Columbia at a White House luncheon paid for by Chase Manhattan Bank.

She said she has "loved what it's done" since she discovered the program in 1967 at Pacific State Hospital in Pomona, Calif.

"I was touring the grounds when suddenly I felt a little hand grab hold of mine," said Mrs. Reagan. "It turned out to be a little 9-year-old boy named George, and he stayed with me the rest of the day -- never letting go of my hand."

She left George that day to his foster grandparent, Roscoe, "but I never left the program, and the program never left my heart." Calling it a "simple idea with heartwarming results," she said, "no program has so captured my imagination and support in helping two special groups of Americans -- the elderly and the disadvantaged young."

Hailing Mrs. Reagan's role as "unprecedented," ACTION director Donna Alvarado said, "She is truly changing the world little by little, person to person, in her own quiet and persuasive way."

Jack Kenyon, branch chief in charge of the program, said three weeks after Reagan became president, Mrs. Reagan asked him and several others to a White House meeting to discuss how public awareness of Foster Grandparents might be increased.

Together they drafted a series of events to spotlight the ACTION program, which enlists low-income men and women, age 60 and over, to provide companionship to physically, emotionally and mentally handicapped children and those who are abused, neglected or have other special needs.

In her remarks, Mrs. Reagan said senior citizens in Foster Grandparents tell the world "that you can't stop aging, but you don't have to get old."

She quoted the actress Ethel Barrymore as saying "wrinkles should only indicate where smiles have been."

"Well," Mrs. Reagan said, "as with foster grandparents, I never seem to notice wrinkles, but I always see smiles."