When doctors diagnosed Daniel Ruppman as mentally handicapped, his parents stood in a parking lot and cried. In 1974 in Norfolk, there wasn't much the public schools were willing or able to do for a child with epilepsy and learning disabilities.

"We were basket cases," said Jamie Ruppman. "There were no classes for him, there were no programs."

Daniel struggled for an education in a private school while his parents struggled to pay the $4,000-a-year tuition. But they quickly grew weary of the emotional and financial drains and in 1975 moved to Fairfax County in search of public schools that could do more to help their son. Although Fairfax schools were more advanced than the Norfolk system in educating handicapped children, it was still a frustrating battle for the Ruppmans.

"They had the classes for him," said Jamie Ruppman, "but there was no parental involvement. The attitude was, 'Don't call us, we'll call you.' "

The next year, everything began to change. The bureaucrats called it Public Law 94-142. The parents of physically and mentally handicapped youngsters praised it as a savior. Most local school boards cursed it as an unwieldy federal albatross. It was the federal government's order that all local school systems provide a meaningful education for physically and mentally handicapped students.

Many educators consider it the most sweeping and controversial change in the American education system since desegregation.

Ruppman credits the law with transforming her son's life. At age 8, Daniel couldn't read. Last year, at age 14, he made the honor roll at his neighborhood intermediate school.

So when the U.S. Department of Education announced plans in August to loosen its requirements for educating handicapped youngsters, Ruppman and hundreds of parents took their personal stories to the department to protest the changes. Eventually, the federal government relented and withdrew several of the changes most feared by the parents of handicapped children.

Concern among parents was intense in Fairfax County, which has one of the largest special education student populations in the country. This year almost 15,700 students -- about 13 percent of the total student population -- are enrolled in some type of special education program, Fairfax records show.

"Our lives have been changed inestimably," said Ruppman, who testified in September at a public hearings in Washington. "I just didn't want to see [Education Secretary Terrell] Bell mess with what is working."

Parents worried that any substantial weakening of the law could mean that local school boards would revert to their sometimes haphazard, pre1975 provisions for educating handicapped children.

"They were really fearful the department was trying to undermine opportunities for their children," said Toni M. Carney, a member of the Fairfax County School Board and mother of a youngster with learning disabilities. "There probably are some changes that would not jeapardize a child's chance to learn, but when you stampede people, it's going to make it almost impossible to get those changes across."

Beatrice Cameron, who serves as director of special education programs for the Fairfax school system, said, "I didn't see anything that would have meant big changes on a local level here."

Ruppman disagreed: "We can't trust our states and localities yet -- even Fairfax."

Some officials argued that the parents overreacted, that school systems desperately need some relief from cumbersome regulations that have strangled their budgets and weakened their authority.

" The law takes up an inordinate amount of school boards' time and expenses," said Lynne Glassman of the National School Board Association, one of the few organizations that supported the changes. "The school districts want more flexibility and authority."

Money has been a major issue in the ongoing controversy over the education of the handicapped. This year the average cost of educating a normal child in the Fairfax Public School System is $3,115. The average cost of educating a handicapped child is substantially higher, ranging from $5,841 for a mildly retarded youngster to $36,624 for a blind and deaf child.

"Most school boards want an equal opportunity for handicapped children," Glassman said. "But not at the expense of other children. It has to be more balanced against the needs of the entire school system. "

"We're not talking about my child getting more than yours," countered Ruppman. "My child has to have this [extra money] to get the same kind of education your child is getting. Most of us would get down on our knees to have our childen going to a neighborhood school in regular classes."

The special education regulations also have meant more bureaucracy and lawsuits for most school systems. They have forced many systems into a frenzied race to find enough special education teachers and enough space to house the mandated classes. In many cases, state and local governments have been forced to come up with the money for many of these "hidden" costs.

Federal officials have been trying to revise the special education regulations since they were imposed in 1975. Plans for revisions began in 1977 and finally were completed this past summer.

However, Bell, bowing to public pressure, has withdrawn, at least temporarily, six of the most controversial changes:

* Placement in the "least restrictive environment," as close as possible to the mainstream of school life, would have been left to the school's discretion.

* Medical services including eyeglasses, insulin injections and other medication would have been provided at the school's option.

* Requirements that schools obtain parents' written consent to educational plans for their handicapped children would have been eliminated.

* Deadlines for setting up individualized education plans for handicapped students would have been loosened.

* Evaluation personnel would not have been required to attend all meetings with parents on the education plans for their children.

* The definition of "qualified personnel" required to deal with handicapped youngsters would have been deleted.

School officials and parents say the skirmishes over the special education regulations will continue indefinitely.

"This thing's working," said Ruppman. "You have kids graduating now that would not even have been in school 10 years ago."

Glassman and others argue the law could be fine-tuned to work better, for both the children and the school boards: "Now it's time to look at it again."