The D.C. Republican Party leadership declined again this week to endorse a candidate for mayor in the Sept. 14 primary, handing real estate broker E. Brooke Lee Jr. a major political setback.

The D.C. Republican State Central Committee, which earlier this year chose to remain neutral in the contest between Lee and James E. Champagne, voted 31 to 23 Tuesday night against a motion to endorse Lee.

Lee, 64, lobbied hard for the endorsement, saying it was crucial to his efforts to raise funds and mount a respectable campaign. Before the vote, at the Capitol Hill Club, Lee boasted that 41 committee members would support him.

Many party activists say they believe that neither Lee nor Champagne, a 38-year-old public affairs specialist, has much chance of upsetting the Democratic nominee in the general election and would prefer to keep out of the Sept. 14 Republican primary.

Ward 3 Republicans, who dominate the central committee, have been particularly wary of getting involved in a potentially divisive GOP race for mayor that might hurt their bid to win a D.C. City Council seat now held by Democrat Polly Shackleton, who is facing a tough challenge in her her own party primary. About half the city's 22,951 registered Republicans live in Ward 3, west of Rock Creek Park.

Lee, who has spent about $20,000 of his own money on his campaign, said yesterday that he will remain in the race, despite Tuesday's outcome.

"I've got a big investment in the campaign. I might as well follow through on the investment," he said. "Harry Truman's favorite phrase was that if you can't stand the heat, get out of the kitchen. I can stand the heat."

Robert Carter, who was reelected Tuesday night as chairman of the local Republican Party, said the state central committee's action was not meant as a rebuke of Lee, but reflected party sentiment in favor of an open primary.

Still, Carter conceded the vote was an embarrassing setback for Lee.

"I suppose if you insist on putting something on the ballot and it doesn't go your way, to that degree it's an embarrassment," Carter said.

Champagne said he was pleased with the outcome, noting that from the start he had been against his party making an endorsement before the primary election.

"I think it will make for a healthy primary," Champagne said.