The decision to lift restrictions on water use in the Maryland suburbs Friday was made at a closed-door meeting in which the chief executive of Montgomery and Prince George's Counties worried about their credibility with the public and sharply disagreed on how best to achieve it.

Montgomery County Executive James Gleason wanted the restrictions to remain in effect, sources said, fearing that to do otherwise just 20 hours after they were imposed would create deep public skepticism that a crisis had ever existed. The long-term result, he feared, would be a lackadaisical attitude toward water conservation and future water conservation and future water shortages during an already dry summer.

Winfield M. Kelly, Jr., Prince George's county executive, argued that since the immediate problem had been eased - reserves were back to 90 per cent after a sharp drop in public usage Thursday - the restrictions should be lifted to remove inquities, a Kelly aide said. The short-term crisis had ended, Kelly said, and , informed of the facts, the public would accept them and act accordingly.

These fact had to do with overall policy issues, but there were other, technical facts not discussed at that meeting that ultimately would have to be faced: Eight "fail-safe" devices similar to house circuit-breakers and designed to limit the damage done by a small electrical fire at the Potomac Washington Suburban Sanitary Commission pumping plant had failed.

There was no fire alarm system in the WSSC plant. Employees could not call the fire department directly - their only phone connected them with the WSSC headquarters.

The fire there Wednesday morning temporarily deprived some communities in Montgomery county of water completely and inspired frantic efforts by county and WSSC officials to prevent a radical drain on reserves, which could have deprived hundreds of thousands of suburban Maryland residents and make effective firefighting an impossibility.

Two days later, Gleason, looking haggard in a rumpled sports shirt, and Kelly, unshowed but wearing a jacket and tie, met in the wood paneled Hyattsville office of WSSC general manager Robert S. McGarry house after he had imposed mandatory water conservation measures - including large scale business closings - to deal with the situation. For 30 or 40 minutes they argued over whether the crisis had ended and about both the human and public relations problems it presented.

The political leaders were briefed by McGarry who favored allowing businesses to reopen but restricting outdoor water use. The WSSC staff - the engineers - warned that the burned equipment would not be fully replaced until next Thursday.

"They wanted to play it supersafe and keep all the restrictions on," said an aide to Kelly who attended the meeting.

Kelly wanted to know if storage levels were sufficient to guarantee water for fighting fires, a major concern at the outset of the crisis. He was told they were, Kelly also talked about senior citizens who would not be able to water their roses, should the restrictions be lifted only on pools and businesses.

Gleason said that restrictions should remain in effect until at least Saturday, the date they had promised to reassess the situation, or else the public might not take the situation seriously.

"Jim, you've been in the business a lot longer than I have, and I'll defer to you if you really think so," said Kelly, "but we'll have a credibility problem if we keep the restrictions on and there may be social strain when people start spying on each other."

They needed to have a common position, Gleason said. Finally, the decision was made, with Kelly the apparent victor. McGarry drafted a joint statement, and the officials prepared to meet the press.

It all began shortly after 7 A.M. Wednesday at the Potomac water treatment plant, where millions of gallons of Potomac river water are pumped each day, treated and pumped again out to Montgomery and Prince George's County customers.

One pump has been making unusual noises overnight so plant manager Tommy Campbell decided to switch to another to handle the normally heavy early morning demand, officials said.

After he hit the switch. Campbell noticed smoke coming from the pump and turned it off. When nothing happened, he pushed an emergency stop switch on the control panel but to no avail. The fire was spreading. Campbell left hurriedly to avoid becoming a casualty.

Meanwhile, the lights had gone out in the main building, 500 feet from the pumping station. Another employee looked out the window and saw smoke "billowing" from the station.

He attempted to call the fire department but the phones were dead, said one employee who asked not to be named.

The employee walked down a flight of stairs and raced 500 feet to the nearest WSSC radio car to call WSSC headquarters in Hyattsville. While he was awaiting a response to his call, the transformers at the pumping station "blew up - it was just like a pop," said one witness.

None of the eight "fail safe" devices designed to turn off the electrical juice and thus contain the fire had worked. "We don't understand why the hell with all those safety devices, something didn't stop it," Richard G. Hocevar, WSSC maintenance and operations chief, said yesterday.

By the time firefighters were able to contain the blaze, the plant had been crippled the blaze, the plant had been crippled. On a day when the temperature would soar to a record 100 degrees, little new water would be able to enter the system and reserves would be drastically depleted by a record draw of 173 million gallons.

WSSC on Wednesday asked the public to impose its own restrictions, but to no avial. On Thursday, WSSC's McGarry called upon the two top county executive to become directly involved.

In a 90-minute telephone conference early Thursday afternoon, they discussed the situation. McGarry recommended closing government offices and car washes and urging public conservation. Montgomery County Council President John L. Menke said that people needed a goal and suggested one: one shower and one toilet flush per day.

Kelly expressed concern about the impact on businesses and major entertainment centers from which the county derives an amusement tax. The meeting ended at 3 p.m. with a decision to impose harsh restrictions, and to schedule the announcement for maximum media impact.

"The timing was beautiful," McGarry said. "The press conference was coming at the time of peak demand, and we made the evening news live."

The closing of businesses would not greatly reduce the water usage but it would create "heightened public awareness of the problem" said a Kelly aide.

Some government agencies initially balked, the General Services Administration and the Department of Health, Education and Welfare in particular.

Because of a cut-off figure of 15,000 gallons consumed per day, some businesses were able to remain open while others had to close, creating confusion and some resentment among shoppers and employees.

Consumption was down Thursday, even as the press conference was held, but officials could not be certain the crisis was past.

The officials met again Friday morning, and Kelly and Gleason agreed to meet at WSSC again at noon, the final meeting that led to the lifting of the restrictions. The tense atmosphere that marked the meeting was eased when a room air freshener suddenly sprayed a fragrant mist through the smoke-filled room.

After Kelly's arguments for lifting the ban prevailed, an aide reflected, "It was two politicians with two different styles acting on an issue. Winnie's method kind of won out. Now it's on us. If people go out and use all the water, we're wrong."

Thus ended - for the moment - a crisis that began Wednesday morning as a failure of technology but soon came to involve also political decisions at the highest levels, calculated media hard-sell to force a wary public to respond, and large unanswered questions of responsibility and regional preparedness tomeet future emergencies.