Despite earlier assurances to the contrary, the Washington area's largest home insulation firm has backed off a proposal to have an independent Massachusetts laboratory test a controversial product it has installed in numerous East Coast homes.

Instead officials of Davenport Insulation Inc. have decided to choose another independent laboratory to conduct tests of the effectiveness of its Thermlo-K insulation, according to a spokesman for Washington Gas Light Co., which recently bought the Fairfax County-based insulation firm.

Thermlo-K, made from chemically threated, finely ground newsprint and sprayed into homes with a nozzle attached to a garden hose, has generated controversy in the insulation industry and among some government energy officials who have questioned Davenport's claims for the product.

In an effort to quash that dispute, Davenport Insulation agreed earlier this year to submit the product to testing by Dynatech R/d Co., a Cambridge, Mass., firm whose laboratory does extensive testing for the insulation industry. Carol V. Davenport, president and founder of the insulation company, said in a September interview that the was confident that Thermlo-K could pass the tests and that the tests would be fairly conducted.

Paul D. Young, a Washington Gas spokesman, said yesterday that agreement was before Davenport read in a Washington Post article that the labo-Washington Post article that the labo-claims like those Davenport wanted to take the product to a lab "he would feel more comfortable with."

Young refused to name the new laboratory, but said the results of the tests will be "published" before the end of the year. The laboratory will "certainly be one of a prestigious nature, as was Dynatech," Young said.

Young's statement came after Stewart C. Spinney, manager of the Cambridge laboratory, said in an interview Monday that Davenpost had yet to submit its product for testing even though the company "has told quite a few" people that the tests are imminent. Davenport "never even contacted us," Spinney said.

In September, Davenport said he had agreed to the testing under pressure from the National Cellulose Insulation Manufacturers' Association, a trade group, and others in the building industry. Many insulation experts contacted by The Washington Post questioned Davenport's claim that Thermlo-K has an insulating value known to scientists as an 'R' value - of 5.2 per inch. The higher the R value, the better the insulation is presumed to be.

Products made from cellulose have tended to have 'R' values of about 4, the experts said. In fact, many said the Davenport process of applying Thermlo-K with water is more likely to lower the insulating values than to raise it.

When told that many in the insulation industry disputed his claims, Davenport replied: "We say that's just sour grapes . . . As the years go by I am positive that this (Thermlo-K superiority) will be identified by everyone in the industry," he said.

Thermlo-K accounts for about 5 per cent of Davenport's current $23-million-a-year insulation business, which is largely concentrated in the Washington area, Davenport said. The product is in strong demand and Davenport said his firm's manufacturing plants "can't make enough of it."