From the beginning, the main issue was parking. Residents of the tree-dappled Woodley Park neighborhood off Connecticut Avenue just above the Rock Creek valley wanted the expanding Sheraton Washington Hotel to provide more spaces than it originally planned, to keep nearby streets free of hotel visitors' cars. Under community pressure, the hotel agreed to a compromise.

But later, practicing what the neighbors now describe as "monstrous fraud and deceit," which the hotel owners deny, the owners persuaded the District of Columbia's zoning administrator that its original plans were adequate.

That set the stage for an acrimonious two-year renewal of a decade-long controversy that may be settled this week between the neighborhood and the two giant corporations that control the hotel, the Sheraton Corp. -- a subsidiary of the International Telephone & Telegraph conglomerate -- and the John Hancock Mutual Life Insurance Co. Hancock, now a partner in the hotel's ownership, was originally the mortgagor of the $50-million reconstruction project at the Sheraton.

The residents contend that, lacking adequate off-street parking space for guests and visitors to its expanded banquet and convention facilities, the hotel forces hundreds of cars onto neighborhood streets, disrupting their everyday life. Hotel officials, insisting they want to be good neighbors, deny this.

If the hotel's neighbors prevail at a decision-making session scheduled for Wednesday, the D.C. Board of Zoning Adjustment will revoke the building permit issued by the city in 1977 and amended in 1979. Such a drastic act apparently would force the hotel and its lucrative convention center to cease operations, at least temporarily.

If the hotel owners prevail, the BZA will rule that the city was right and the protesting neighbors have no legal leg to stand on in pressing their appeal because, among other things, they mounted it too late.

The issue, which largely boils down to a highly legalistic numbers game based upon interpretations of the city's 1958 zoning code, has its roots in a plan announced in 1974 to rebuild and expand Harry Wardman's rambling, old resort-style Wardman Park Hotel, which had been acquired in the 1950s by Sheraton and renamed the Sheraton Park.

Under the zoning code, a newly built or expanded hotel is supposed to have one parking space for every two guest rooms and one parking space for every 100 square feet of convention space that is not merely incidental to the hotel's guest-related operations. By the protesting neighbors' figures, that should produce 2,000 spaces.

But the two sides do not even agree on the basic figures.

The protesting neighbors contend the hotel in 1962 had 1,100 guest rooms, 78,208 square feet of assembly and meeting space and 595 off-street parking spaces. Now, by their figures, it has at least 1,501 guest rooms, about 200,000 square feet of assembly and meeting space -- and still only 595 parking spaces.

To gain city approval for its reconstruction, the hotel promised at the outset to expand the parking to 898 spaces, the residents claim. In a legal brief prepared for the BZA by attorney Jack I. Heller, the neighbors said the hotel management "failed to perform and . . . the city failed to enforce" the promise. In fact, Heller charged, by a computation "that would convert a saint to a cynic," D.C. Zoning Administrator James Fahey in 1979 amended Sheraton's building permit by upholding Sheraton's right to provide only the existing 595 spaces.

Fahey declined last week to discuss his decision.

The appeal filed by the neighbors basically seeks to overturn that decision.

In another brief for the BZA, Whayne S. Quin, Sheraton's attorney, challenged the neighbors' figures and denied the allegations of deceit made by them. Partly because original plans were changed, the hotel has only 1,366 rentable rooms and not 1,501, Quin contended. Because 209 of those are in the hotel's Wardman Tower building, erected before the zoning code was invoked in 1958, they are legally exempt from any parking requirement, he said. As a result, Quin asserted, the hotel actually only needs to provide 579 parking spaces, 19 fewer than already exist.

As the the convention space, Quin contended it had been a function of the Sheraton Park for yhears, and should be permitted to continue as an incidental purpose of the hotel without a requirement for additonal parking.

William H. Carroll, chairman of the Woodley Park citizens' task force, a coalition of neighborhood groups, said the appeal to BZA was filed only after Mayor Marion Barry refused at a 1979 meeting to intervene and overturn the zoning administrator's decision. During the meeting, Carroll said, the mayor placed a telephone call to Rand V. Araskog, chairman of Sheraton's parent ITT Corp., to discuss the citizens' position, but the executive refused to talk to the mayor.

Charles Szoradi, an architect who is a member of Woodley Park's Advisory Neighborhood Commission, said the parking spillover diminishes the quality of residential life. When he moved there 15 years ago, he said the hotel, with such amenities as an outdoor ice-skating rink, helped give the neighborhood a continental ambiance.

"But now the cars come, [with their occupants] emptying trash, tossing beer cans, blocking fire hydrants, alleys, driveways," Szoradi said.