At Rosemary Hills Elementary School in Silver Spring, a bright yellow sign at the entrance yesterday proclaimed "Rosemary Survives." The message reverberated through the upper 16th Street area that the school would not be closed as scheduled, and "Hooray" and "Rejoice" were soon scribbled on the sign as well.

"Everything was packed up and ready to go but now we are all anxious to unpack and get on with our work," said Estelle Glazer, a remedial reading teacher who dropped by the school and sat amid stacks of boxes and files in the nurse's office. "This is a very special school. It works for every student who goes here."

Lauris Stewart, a maintenance worker at Rosemary Hills for 26 years, heaved a similar sigh of relief. "This place is like a second home to us and we didn't want to leave," Stewart said. "The phone here has been ringing off the hook. These people really love their school."

The landmark decision Wednesday by the Maryland Board of Education--the board's first reversal of a local school closing--was a victory for liberals and minority groups who have fought for months to save Rosemary Hills, a national symbol of voluntary racial integration.

And it was a dramatic climax for citizens who have waged a three-year war over racial integration policies with the County Board of Education majority that gained control in 1978. Despite angry objections from the minority community, the new conservative board had succeeded in raising the acceptable ratio of minority students in schools, firing the board's Minority Relations Monitoring Committee, and withdrawing a requirement that teachers take a course in black culture.

Then last November, the board took its most dramatic step by deciding to close Rosemary Hills and change the attendance boundaries of other high-minority schools in the Silver Spring area. It was a move that provoked County Executive Charles Gilchrist to intervene on school matters for the first time, asking the board to reconsider the decision. It led to an American Civil Liberties Union study of the board's decisions on school closings county-wide and their effects on integration. And it began a long community appeal to the state board, which under Maryland law has ultimate responsibility for public education as well as the authority to enforce measures to curb discrimination.

"At a time when school desegregation is under severe attack in many parts of the country, Rosemary Hills is a symbol of how it can work effectively," said David Tatel, a lawyer who worked on civil rights cases for the Carter administration and whose two children were bused from their Chevy Chase neighborhood to Rosemary Hills. "It was voluntary rather than court-ordered, it was two-way busing, and it involved wealthy children and poor children. It was a national model worth saving."

The state's opinion, coincidentally handed down the same day as a new Supreme Court ruling upholding voluntary busing in Seattle, was another reminder of the seriousness of the integration issue in a county undergoing profound demographic changes.

More than any other of the county's 177 schools, Rosemary Hills has been at the heart of the decade-long debate over racial integration and school busing.

Its student body was the first to reflect the changing profile of the Silver Spring area, evolving from a predominantly white school in the early 1960s to one that today is largely black and Hispanic. Rosemary Hills became the first disproportionately minority school in the county, and the school board responded in 1975 by creating the county's first busing program for racial integration.

As a result of the 1975 decision, Rosemary Hills was "paired" with Chevy Chase Elementary, located in a more affluent and predominantly white neighborhood. Students from both areas attended Rosemary Hills for kindergarten through second grade and Chevy Chase for grades three through six.

The school adopted the theme of a "rainbow"--tulips and pansies were planted in a crescent-shaped garden at the flagpole and rainbows were painted on classroom walls--to celebrate the notion that its diverse pupils melted together like the colors of a rainbow.

But five years after the busing plan began, a new school board had emerged and, supported by some parents in the Chevy Chase area, declared that Rosemary Hills was "an experiment that failed."

Members of the board majority met for an hour and a half last night to consider what to do about the state board's opinion but made no decision and are scheduled to take up the matter again July 13. One course would be to challenge the opinion in Montgomery County Circuit Court. Parents from the community, including lawyer Tatel, are urging board leaders to act like "statesmen" and "declare that the war is over."

In the meantime, jubilation reigns at Rosemary Hills. "It's time to celebrate," declared Miriam Stewart, the principal's secretary. "The rainbow lives."