It was midnight at the oasis.

Inside the Birchmere - tucked between an A&P and Jack'n' Jill's Billiard Room in a South Arlington shopping center - Linda Ronstadt was belting out a bluegrass tune. The jukebox was unplugged; Ronstadt was on stage.

"She came in one night a few months ago after finishing a concert at the Capital Centre," Gary Oelze, the owner-manager of the 200-seat club recalled last week.

"She walked in with John Starling of The Seldom Scene and got up on stage for about 30 minutes. It was great. The audience was stunned. Of course, (country/rock star) Emmylou Harris still comes over when she's in town. (BCS newscaster) Roger Mudd was here last week. And a Japanese man told me the other night he'd heard of the Birchmere in Tokyo."

Once just another neighborhood bar, The Birchmere, five miles from downtown Washington and light years away from big-city sophistication, has become one of the better known clubs in the country among lovers of bluegrass music.

The neon sign was put up 15 years ago, there's no dance floor and no hard liquor, but the club - located in an aging cluster of stores on Wakefield Street - is an oasis for a growing number of disco-dropouts, condominium cowboys in straw hats and plaid shirts, beer-bellied good old boys in pickup trucks, bored teen-agers, rock stars and city slickers.

"You'd swear you were in Austin, Texas," said one Capitol Hill worker who decided to go honky-tonkin' last week.

Several Washingtonians said they prefer The Birchmere's down-home ambience to other country-bluegrass clubs in the area, including the popular Red Sox in Bethesda. The Birchmore, they said, is the ultimate in Hee-Haw hillbilly chic.

"But we don't have no trouble here," said "Moose", the 6-foot, 300-pound bouncer in cowboy hat, rainbow colored suspenders and Fu Manchu mustache who stood at the door chugging a Fresca.

He kept an eye on the smoke-filled room and watched the crowd scramble for seats - cigar-puffing accountants in gabardine suits next to marines from Quantico rubbing shoulders with matrons in chiffon evening dresses.

"My only complaint," said Lou Bryant, a 52-year old grandmother from Corpus Christi, Tex., "is that it's too crowded." Bryant said she had heard of The Birchmere in Texas and decided to drop in while visiting relatives in Washington.

Oelze said he was "lucky" to get 60 people into The Birchmere, when it opened. "Ten years ago, if there were 60 people in here, it was a good night."

Then in 1974, Oelze decided to try bluegrass. He started charging a cover fee (usually $3 a night) and hired the best local and national bands: The Country Gentlemen, The Seldom Scene. The Rosslyn Mountain Boys, J. D. Crowe and The New South. The Birchmere now is packed every night.

"This neighborhood used to be filled with white collar government workers," Oelze said. "But it's changed a lot since I've been here. It went into a slump several years ago and most of the young couples moved to Dale City. Now it's coming back with the condominiums. It's always been a nice neighborhood, but most of the people come to The Birchmere from everywhere else but the neighborhood."

One night last week, The Seldom Scene, a local bluegrass group with a national reputation, had just finished their first set to loud applause, the clinking of beer mugs and several "Yahoos." Cigarettes were lit and wooden chairs pushed back from the checkered-clothed tables. A bleached-blonde waitress in a tight T-shirt stuck soggy dollar bills on the bar.

Three young men smoking Gaulois cigarettes and speaking French, sat down next to Randy Bailey from Fairfax. He loved it.

"I thought they were putting me on at first," Bailey said, slapping his blue-jeaned thigh.

Had the visitors missed their tour bus?

"Non," said Claude Jegonde, from Metz, France. "We like zee bluegrass music and we heard about zee Birchmere." Jegonde and his friends didn't speak so much English, but they knew every word to "Tennesses Stud."

"There's no question that Gary has developed a national following," said Joe Triplett, lead singer of the Rosslyn Mountain Boys."People from the West Coast always ask me where the best Washington bluegrass is. I tell them The Birchmere."

Mike Oberman, a local band manager, said, "It's out of the way, and hard to find. But there are no parking hassles."

Gary Oelze said he spends no money on advertising. Every month he sends a newsletter advertising the upcoming acts to the 2,000 people on his mailing list.

The musicians call it one of the best "legitimate listening" rooms in the country.

Mike Auldridge, dobro player with The Seldom Scene and friend to Dolly Parton, Emmylou Harris and Ronstadt, sat in The Birchmere's dressing room last week, taking a break.

Mike was talking about the band's performance at the White House this summer, when they were asked to play for President Carter's South Lawn staff picnic.

"I was really excited," said Auldridge. "I'd never been to the White House before."

Glancing around the dressing rooms beer-stained linoleum floor, dusty slipcovers and scarred wooden-paneled walls, the musician smiled.

"The White House was nice," Auldridge said, "but The Birchmere is better."