Former President Juan Velasco Alvarado, who led Peru during seven years of nationalistic changes, died in Lima yesterday at the age of 67.

Doctors said Gen. Velasco died complictions from an inflamed pancreas. The former president had suffered from circulatory problems for some time. One of his legs was amputated in 1973.

Gen. Velasco typified a new breed of Latin American military officer thought in the mid-1960s to be bringing social and economic change to underdeveloped countries.

During his seven years in power, Velasco and his reform-minded colleagues implement a number of basic changes in the country's economy and foreign policy. In the two years since he was deposed, however, many of those policies describe as a swing to the right.

Born to a poor, provincial family, Velasco challenged the entrenched power of the wealthy and artistocratic "40 families" who had ruled Peru for decades.

When he came in 1968, he declared: "Today we have placed our sword at the service of the oppressed to carry out a profound social revolution." He vowed that this social revolution would be neither capitalist nor communists, but nationalist.

Although Velasco often identified himself with Peru's Indian peasants, he was actually from a lower middle of Pieura.

He joined the army as a private at the age 18 and worked his way up through the ranks. He attanded the military academy, and graduated with top honors at the age of 24.

He often described himself as "a soldier and a revolutionary, not a politician."

The most important intellectual influence on Velasco and like-minded military men was Peru's Center for Higher military Studies, founded in 1950, which encourages young officers to look at problems og underdeveloped countries from the point of view of the social sciences. Preuvian conservatives complained that many of the professors were leftists.

One American diplomat described the school's importance during Velasco's administration, by saying: "Imagine a situation in which the President of the United States and the majority of top officials in his administration were all graduates of the National War College or the Command and General Staff School at Ft. Leavenworth."

Velasco and other officer trained at the institute overthrew the elected civilian government of President Fernando Belaunde Terry in 1968 in the midst of a crisis over nationalization of petroleum production.

Velasco immediately ordered army troops to the northern coast to take over a refinery owned by the International Petroleum Co., a Standard Oil of New Jersey subsidiary. The nationalization created tension between the United States and Peru and resulted in a cutback of U.S. aid a lasting several years.

The new military government launched a vast agrarian reform program, expriating millions of acres of land and turning it over to peasant cooperatives. It also began an ambitious program of educational reform and community organizing aimed particularly at Indians and other poor Peruvians.

Velasco's government opened diplomatic and trade relations with the Soviet Union and its Eastern European allies, and, in 1972, became the first Latin American country to renew relations with the Cuban government of Fidel Castro. Later in Velasco's administration he nationalized other basic industries, including the copper mines of Cerro Corp.

After the amputation of his leg in 1973, Velasco Alvardo become more arbitrary, according to his associates. He nationalized the press in 1974, futher allienting middle and upper class Peruvians many intellectuals who had supported his policies. He exiled a number o writers and lawyers.

The end of his administration came ironically, during a 1975 meeting in Lima of the nonaligned nations, of which his government had once been considered a model. He was depodsed without resistance, by his collaborators in the 1968 revolution.

While many of Velasco's changes in foreign policy agrarian reform and nationalization of industry have remained in effect, his more radical policies have been reversed by his successor Gen. Francisco Bermudez.

Velasco leaves his wife, the former Consuelo Gonzalez, two sons and two daughters.