D.C. City Council member Betty Ann Kane ended her bid for the Democratic nomination for mayor yesterday, saying there was only one barrier that her campaign could not leap--her inablity to attract financial support.

Kane, who loaned her campaign $16,000 last month to keep it going, said race was not a factor in her decision to drop out.

"I would not have gone into this race if I wasn't convinced that we could win," Kane said after making her announcement in the District Building before about 50 grim-faced supporters yesterday. "There is only one issue and one color why we cannot continue and the color is green, the color of money."

Some of her organizers and fund-raisers had complained publicly that many whites--particularly major financial contributors in the business community--have been reluctant to back Kane because they do not believe someone white could be elected mayor of a city whose population is 70 percent black.

Kane said she began considering withdrawing from the race after a television advertisement and mini-telethon, aired two weeks ago and expected to raise $100,000, raised only about $15,000.

She said she made the decision to leave the race at a meeting of her strategy committee Sunday night and announced it yesterday because she is beginning her campaign to win reelection to her at-large council seat and must submit petitions for that campaign by July 7.

"Over the last seven months I and hundreds of my supporters have worked tirelessly to put together a campaign to carry the dream of good government to the people. . . . , " Kane said. "We have run a good campaign and we have contributed a great deal in raising the public consciousness and focusing on the critical issues. There was a tremendous amount of support, people said Betty Ann Kane is the best candidate, but can she win?"

Kane, however, said she still wants to be mayor: "I would like to say to all of you and to all the people of the District of Columbia that this is not a dream denied but a dream deferred."

Kane said she had no plans to endorse any other canidate in the mayor's race. She has been a strong critic of incumbent Marion Barry's handling of city programs and the city's budget throughout his administration, and aimed darts of criticism at the other front-runner, lawyer Patricia Roberts Harris, for her lack of previous involvement in the city government.

Kane is entering an at-large race that has already attracted school board member Barbara Lett Simmons and Johnny Barnes, a former aide to delegate Walter Fauntroy.

Several of Kane's supporters, particularly parents active in the public schools who came to know Kane when she was a member of the school board, strongly oppose Simmons' candidacy. But Kane said yesterday that she would campaign only on her record and "not against anyone else."

Simmons, an at-large member of the school board, could not be reached for comment yesterday.

Kane immediately picked up key support for the at-large race from John A. Wilson (D-Ward 2), H.R. Crawford (D-Ward 7) and Polly Shackleton (D-Ward 3). The support from Wilson, who has had several bitter fights with Kane, came as a surprise.

"We've had our disagreements ouver the years," Wilson said after leaving Kane's press conference, "but the lady does her work. She is a worthy adversary, a gutsy lady. I like worthy adversaries, people who make me want to work."

Wilson, chairman of the council's finance and revenue committee, said the major issue in the city currently is the District's financial condition.

"Whether anyone wants to deal with it or not she's knows what's happening in that area better than most people on the council," Wilson said.

Kane's departure from the mayor's race changes the shape of the contest. She had finished third in early polls, far behind Harris and Barry. Kane had about 7 percent of the vote compared with about 27 percent for Barry and 38 percent for Harris.

Council members John Ray (D-At Large) and Charlene Drew Jarvis (D-Ward 4), the other remaining candidates for mayor, trailed Kane in the polls, but both contended yesterday that they would benefit from her withdrawal.

"I know it was a painful decision for her," Jarvis said. "I haven't raised a lot of money either, but I continue to be a viable candidate . . . The traditional money-givers have waited for a shakedown period. Now I think they really see who is going to be in the race--myself, Pat Harris and the mayor."

Ray, who like Kane has had serious trouble raising money recently, said he is now spending "a lot of my time raising money myself." Ray said he had no plans to drop out of the race.

Ivanhoe Donaldson, Barry's campaign manager, said he expects Kane's supporters to spread out to all three camps. Donaldson said he considers polls done for his campaign and Harris'--which show most of Kane's supporters favoring Harris as their second choice--are now out of date.

Sharon Dixon, Harris' campaign director, said that with Kane gone the race now boils down to a two-candidate contest between Harris and Barry with Harris as the clear alternative to Barry.