A D.C. commission studying declining city neighborhoods yesterday urged the city to adopt a comprehensive program designed to increase home ownership among lower income groups and revitalize deteriorating residential and areas.

The program, the result of more than a year's study, would be commercial funded by a combination of public and private monies, minimize displacement of families and provide new jobs, according to the commission.

The program was proposed by the Neighborhood Reinvestment Commission, which consists of 17 representatives from public and private institutions and was established by the City Council.

Commission chairman William J. Jameson noted in a letter accompanying the recommendations that unless immediate action is taken "to reduce displacement caused by skyrocketing housing costs and land speculation in 'transition' neighborhoods," a "domino effect" will be created.

"The transition neighborhoods of today will spawn the transition neighborhoods of tomorrow. The ultimate result will be racially and economically imbalanced neighborhoods and an unstable, inequitable society," Jameson wrote.

The major components of the commission's housing finance plan already have received support from D.C. Mayor Walter Washington, community organizations, the Metropolitan Washington Savings and Loan League, the District of Columbia Bankers Association, the Federal National Mortgage Association and Geno Baroni, Department of Housing and Urban Development assistant secretary for neighborhoods and a former D.C. neighborhood activist. Yesterday, most D.C. City Council members also praised the commission's work.

The six-point housing plan basically recommend: establishment of:

a neighborhood-based housing counseling program for tenants homeowners and landlords:

a loan review committee consisting of industry, government and citizen representatives that would analyze all rejected housing loans and ensure that none was rejected on improper grounds;

a rehabiliation loan program that would employ federal community development funds as a supplement to rehabilitation loans from commercial sources;

a program that would provide intensive technical assistance to landlords, tenants and lenders by helping them fix up deteriorated multifamily buildings without substantial rent increases or tenant displacement;

The proposal would also involve the expansion of mortgage lending policies to remove allegedly discriminatory appraisal and lending criteria used by local lenders, and would include a program to rehabilitate and sell vacant and boarded-up residential properties to low and moderate in come households.

The right of Lt. Gov. Charles S. Robb and 115 Democratic members of the General Assembly and Congress to vote as ex-officio delegates to the convention also faces a floor challenge. A majority to these elected officials, but possibly a small one, are thought to be Miller votes.

The commission also recommended development of a neighborhood economic development program. Its goal would be to provide easily accessible, lower-cost retail goods and services to neighborhood residents.

At the same time the program would seek to provide new jobs by funneling public and private assistance to "targeted" commercial neighborhood centers and light industry and wholesale enterprises. One element of that program would be the creation of a development company that would tap both private lenders and Small Business Administration funds.

James D. Vitarello, executive director of the commission, said the most important element of the housing finance plan is a rehabilitation loan program.

In order to operate the program in five of the city's neediest neighborhoods, Vitarello estimated that it would cost annually at least $5 million of the city's federal community development block grant funds and another $25 million from private financial institutions. The program, Vitarello added, is something that could be begun immediately, however.

"The city has millions in unspent community development funds," Vitarello said. "There's no reason at least $5 million can't be used for this program." He said that probably half the city's neighborhoods need such a program.

Under the tandem rehabilitation loan program supplementing commercial loans with federal funds, for example, a person needing a $10,000 loan to fix up his house could receive a loan of $6,800 at 9 percent interest from a bank or savings and loan firm and a $3,200 loan from the D.C. housing department that would be repaid only when the house is sold, Vitarello said. The person's monthly payment for the commercial loan would be only $69.02 to the bank or savings and loan company, he said.

D.C. Mayor Walter Washington said in a telephone interview yesterday that he has met with commission representatives and supports most of the elements of the housing finance plan that were presented to him.

"I'm on target with them," Washington said. "any problems we have are minor." The mayor said he will issue an executive order to carry out some of those plans after the housing department meets further with community leaders.