D.C. officials have recommended rejection of a controversial proposal to expand the Dupont Circle Historic District, a plan that has sparked strong opposition in Shaw because of fears that it will cause displacement of neighborhood residents.

"There are architecturally distinctive blocks in the area but they do not have any significant relationship to the Dupont Circle Historic District . . . . They do not deserve to be included," said the report by Lucy B. Franklin, chief of the city's historic preservation division.

The report recommends rejection of the proposal by the Joint Committee on Landmarks, which is considering the application.

However, Ernest Harper, the chairman of the committee, termed the city's report "ludicrous" yesterday and said it ignored historic values because of political pressures generated by opponents of the Dupont Circle plan.

Four Dupont Circle neighborhood groups are proposing to merge the 16th Street Historic District with the Dupont district into an expanded historic area that would extend to 14th Street NW on the east and Rock Creek Park on the west.

Designation as a historic district would mean that any building alterations requiring a building permit must be reviewed by the joint committee. In addition, it makes the property owners eligible for 25 percent tax credits for rehabilitation of historic properties, real estate tax abatements, and grants from the National Trust for Historic Preservation.

More than 100 people turned out for the committee's 10-hour hearing on the issue last week. The committee will recommend approval or rejection later this year, with the decision made by the city's historic preservation officer, Carol Thompson.

Preservationists and Dupont Circle community activists have pushed the plan as a means to protect the area from the encroachment of downtown commercial development and to preserve historic properties, according to Richard A. Friedman, a lawyer representing the Dupont Circle Conservancy Inc.

In addition to the distinctive architecture of its late-19th-century town houses, the Shaw area played an important role in Washington's black history as the home of prominent writers, ministers, artists and educators. The area includes many churches, such as the Metropolitan AME Church, which is the oldest continuously black-owned property in Washington and was a stop for the underground railroad in the Civil War era.

While some in the Shaw neighborhood support the application, other community groups are strongly opposed. "There is no way in the world that Dupont Circle has ever extended to 14th Street," Ibrahim Mumin, director of the Shaw Project Area Committee, testified last week.

Mumin's group was joined in its opposition by the 14th and U Street Coalition, Advisory Neighborhood Commission 1B, and other organizations and churches.

Low-income blacks, who already have been displaced by condominium conversions, rising real estate values and higher taxes, would be adversely affected because the historic district would speed up the turnover of properties to wealthier people, Shaw spokesmen said. Mumin had characterized the application earlier as a "land grab by the middle- and upper-middle-class Caucasians that live around Dupont Circle to extend their political influence."

The current application is virtually identical to one submitted in 1976. In 1977, the joint committee approved creation of the current 16th Street and Dupont Circle districts, but ruled that the other areas did not merit historic designation, largely because applicants had not demonstrated their historic value.

In reapplying last year, applicants submitted more than 40 pages of historical background. But the city's four-page report concludes that the presentation "is not adequate to determine historic determination."

Harper said of the city's report: "I think it's ludicrous. It ignores the historic and architectural merits of that part of town. I think the staff report was determined by others outside the historic preservation office." He would not elaborate.

Franklin was unavailable for comment.