A group of Hyattsville residents, businessmen and politicans have banded together to try to reverse years of physical deterioration in an area of the city known as the Route 1 corridor.

In the 1950s, the 3 1/2-block strip on Baltimore Avenue between the Prince George's County Service Building to the south and the Hyattsville Armory to the north was a bustling shopping district serving residents of Hyattsville and surrounding municipalities.

But with the advent of shopping centers, particularly nearby Prince George's Plaza, shoppers moved away, followed by many small retail establishments that once flourished in the area.

The shops were replaced by light industry and service-oriented businesses, city officials said. But many of those have also abandoned the area in recent years, leaving a dark, ghost town-like strip bordered by car dealerships to the north and a barren stretch to the south.

But people like James Welbourne, an information systems analyst for a research and development firm who has lived in Hyattsville five years, envision something better. Though some longtime residents are cynical, Welbourne and others are spearheading an effort to convert the area into a quaint village square-type development with antique stores and white-collar businesses and industries.

"People have said to me if this area of Hyattsville could be commercially viable, development would have already happened," said Welbourne, president of the Hyattsville Local Development Corporation (HLDC). "We are contending that no one has put the time and effort into the area in recent years, and it has economic viability as an 'old town' like Georgetown, Bowie, Alexandria and Kensington."

The HLDC was formed earlier this year as an offshoot of a citizens task force set up to study business revitalization in the city. The task force was one of four groups looking into such renewal-connected issues as transportation, land use and historic preservation.

The corporation's primary concern is to make the Route 1 strip the "front yard" instead of the "back door" of Hyattsville, Welbourne said.

Modeled after a 3-year-old land development corporation which has helped oversee the continuing rehabilitation of Bladensburg, the HLDC will help control what types of businesses locate in Hyattsville. As new businesses express an interest in the city, Welbourne said, the corporation will advise city officials on whether to grant them licenses. It is seeking a stronger role in the license-granting procedure, Welbourne said, and it will help new, desirable businesses move to the community.

He added that the presence of a land development corporation shows the federal Small Business Administration (SBA) that a revitalization project has community support and makes potential businesses eligible for SBA funds.

Welbourne said Hyattsville's proximity to Washington and to other historic towns undertaking revitalization projects, such as Bladensburg, Riverdale, College Park and Mount Rainier, makes it a prime area for an old town. He pointed to the city's many old homes and to the few antique dealers who already work in Hyattsville as cornerstones for an "antique row."

In April 1979, Hyattsville and Pittsburgh, Pa., were part of a University of Southern California study on revitalizing communities that had both historic and commercial significance and the potential for a bright future. The task force from which HLDC evolved was set up during that study.

Since then, residents, businessmen and city officials have attempted to give the community a face lift. Trees were planted along Route 1 sidewalks. Citizens gathered on Saturday mornings to help clean city streets and lots, which now seem to remain clean for longer periods than before.

"It is all part of a renewed interest and pride in the city," Welbourne said. "We want people to come down and shop on Route 1. In this day and age where both members of a family are working, it is sometimes difficult for people to drive off to faraway shopping centers. We believe that people would much rather shop or get a bite to eat somewhere near their home."

The first step toward this goal, Welbourne said, is to attract businessmen and local shoppers to the area. That is why HLDC members decided to begin a farmers and antique dealers market in the city's municipal parking lot on Saturdays.

"The . . . market has been highly successful, more so than most people expected," Welbourne said. "It turned a lot of people's heads who were skeptical about our efforts."

Hyattsville Mayor Thomas L. Bass said, "The farmers market is proving that Hyattsville is an area that can attract consumers and consumer-oriented business. We are going to try and attract any kind of clean, viable business to the area."

Welbourne added that the HLDC may eventually ask some businesses now on Route 1 to leave and ask others to work on their appearance.

"The Yellow Cab company does not need the Route 1 location, and we would ask them to relocate, offering them help, of course," Welbourne said. "Others, like some of the car dealerships, would be asked to rehabilitate their property," he said.

The corporation is trying to raise money, build a staff and come up with a revitalization plan.

It has already received several thousand dollars in private contributions and the city has committed $25,000 to commercial redevelopment in its 1981-1982 budget. Of that, $10,000 will go to the corporation, mainly for promotional activities, Welbourne said.

"We have all kinds of ideas, but we need some funds," Welbourne said. "There are a number of local people, myself included, who would be willing to quit our jobs and undertake this project full time, but first we need the money."