At the age of 6, Cathy still was not toilet trained and her only form of verbal communication was screeching.

As an infant she had been taken in by a private family service agency when her teen-age mother decided she could not deal with a baby she thought was blind and deaf with physical handicaps, "a vegetable baby," according to a social worker. As it turned out, Cathy's main problem was that she was retarded, but she remained in foster care as a ward of the city government until this year.

Now she is being adopted by Henrietta and Thomas Gross, a couple who lives two hours from Washington in Southeastern Maryland with their outgoing teen-age daughter Michelle. Cathy not only is toilet-trained now, she has said her first words and has started playing with other children at the special school she attends, something she did not do before.

"We just wanted to adopt. It really didn't matter" that Cathy was handicapped, said Henrietta Gross, a library assistant at the Naval Ordinance Station and one of 13 children herself. "I have all the faith in the world and so does my family," many of whom live nearby, that Cathy can become more self-sufficient.

Cathy is one of the first children to be placed in a permanent home under a new D.C. Department of Human Service system that uses private agencies to find homes for children with special needs. This can include children with severe physical, mental or emotional handicaps, older children or brothers and sisters that need to be placed together.

Not so long ago, children like Cathy were thought to be unadoptable because of their disabilities. While there have been long waiting lists across the country for healthy infants, particularly white baby girls, severely handicapped children often were destined to spend their lives in institutions or were shuttled between foster homes.

The city has contracted with four private agencies--Peirce-Warwick Adoption Service, Lutheran Social Services, Associated Catholic Charities and the International Adoption Agency--and pays them a fee when they find an adoptive family for a child with handicaps or other special needs. In addition, a Detroit agency, Homes for Black Children, gets funds for two social workers to try to do the same thing.

D.C.'s "purchase-of-adoption" system is one of the first of its kind in the country, said Regina Bernard, chief of DHS' Child and Family Services. The department's ambitious goal is to have 100 special needs children placed through the purchase system by the end of this year, Bernard said.

In the first months of the system's operation, 12 children were referred to the system, and homes have been found for at least five of them so far. These include an older child with cystic fibrosis, a 15-month-old girl with severe sight and hearing problems who is probably retarded and a boy who is both emotionally and physically handicapped.

DHS has responsibility over about 2,000 children. The agency tries to reunite some with their families, helps others become independent and looks for adoptive homes for others. Under the department's new adoption system, a hard-to-place child is put into the purchase-of-adoption program and the private agencies pool their resources at monthly meetings to find suitable families for them.

If none is found within a certain time, one agency is designated to recruit for a specific child and must report back to DHS on its efforts. This leaves DHS free to deal with the easier to place children while agencies geared specifically to those with special difficulties do an intensive search for families.

"The department just hadn't been able to place those handicapped kids, and the families were out there," said Nancy S. Smith, director of the Child Advocacy Center. "This way the kids don't get forgotten" or stay in foster care longer than necessary, she said. Brenda Jones, the Peirce-Warwick social worker who helped place Cathy, said the people who choose to adopt severely handicapped children generally fall into two categories: those who feel they want to do someone some good and those who have a simple philosophy of life that people are basically the same despite their physical or mental difficulties.

"We hear that a lot, 'They're all God's children,' " Jones said. Those with that philosophy generally are the most successful, she said, because they are more patient and expect less from the child.

The agencies work with each prospective parent to make sure they know exactly what they are getting into and that it will not be easy to deal with the children, particularly the emotionally disturbed ones, Jones said. About 25 percent of special-needs adoptions are not successful, she said.

She gave the example of three sisters, beautiful little girls who had been physically and sexually abused by their parents. They have been put in four homes but none has worked out. "They the prospective parents say, 'We're just going to love them up,' . . . but it takes a lot more than that" to understand the unique problem these children face.

Adoption professionals stress that the old rules about who can adopt a child no longer apply. Adoptive parents can be single, older, or handicapped themselves, and they do not have to be well-to-do or have a particular religious background.

"We try not to set up arbitrary barriers," said Judy Hall, in charge of the program at Lutheran Social Services. "I'm convinced the families are there."

In the Gross household, the two daughters are the center of attention. On practically every wall, table and shelf there are photographs of 15-year-old Michelle. Cathy takes turns climbing into all three laps in turn, while Michelle encourages her to say one of the five words now in Cathy's vocabulary.

Both from large families themselves, the Gross couple had wanted 10 children of its own. Tom Gross, a quiet man who is a medical transportation driver, nods in agreement when his wife says they would like to adopt at least three more children. If they are handicapped, that is fine, too, she says.

"We have more patience and determination than most people," Henrietta Gross explains. "I don't think wild horses could get Cathy away from us."