Mega-socialite and mighty fundraiser Gayfryd Steinberg has severed her ties to the New York writers' organization PEN after New York Daily News columnist Ken Auletta called her husband, well-known corporate raider Saul Steinberg, "sleazy" in a New York magazine gossip column.

What a difference a word makes.

Apprised of this latest development in the literary world's summer tempest, Auletta responded: "I feel now as I have ever since I attended my first PEN dinner about four years ago. ... It's a legitimate issue to ask about how you raise the money for a very worthwhile organization."

But he added: "I didn't intend for this to become a public issue at the time. It was all an accident. ... She has chosen to recuse herself. I'm sorry she feels some pain, but criticism and questions, that's a writer's life. I don't think one should confuse the issue of manners with the issue of funding."

Steinberg, who resigned last week, did not issue a statement. Somehow, though, her resignation became known to gossip columnist Liz Smith, who reports it in today's New York Daily News. Steinberg was unavailable for comment yesterday, but a source said she feared she would no longer be effective as a thrower of lavish PEN parties and head of a new PEN fund-raising organization. She was also said to be a little upset about the whole matter.

PEN President Larry McMurtry wrote a brief letter yesterday thanking the Steinbergs for their "generosity and loyalty" over the years. "We regret that you feel you must leave; we will miss you very much," he said. He declined further comment.

McMurtry and dozens of others on PEN's 79-member board had written an earlier letter of apology to the Steinbergs but by that time the story had taken on a life of its own. In the New York magazine gossip column, Auletta said Steinberg's husband is a "pretty sleazy character" while he also expressed his concern about "wealthy people gaining respectability on the backs of writers."

The news of Steinberg's departure shocked PEN board member Gay Talese. "Oh boy," he said when told of Steinberg's departure. "Wow. I can say that I'm very surprised. I'm very surprised. Very, very surprised."

Talese said Auletta was "extremely indiscreet" but added, "We're just going to have to go on, living with the things we wish we hadn't said. That's also part of free speech."

He acknowledged that he was responsible for bringing Auletta on the board. "Little did I know that this would be the result," he said. "I take full responsibility and by tomorrow I'll just jump off a bridge."

The events of the summer will no doubt be a hot topic at the September PEN board meeting. "I have no question," Auletta said, "that mine is a minority position on the board."