The controversial White House proposal to link raises, promotions and the job security of white collar federal workers to performance rather than seniority would be scaled down to a temporary demonstration project under a plan announced yesterday by Sen. Ted Stevens (R-Alaska). Stevens said he worked out the compromise with federal unions.

If approved, the plan would block the pending White House work-rules change designed to base eligibility for within-grade raises, some promotions and layoff lists on employes' last performance ratings rather than time in the government.

Stevens' compromise would limit the performance-based incentive program to a three-year test. It would cover only 150,000 civil servants nationwide, instead of the 1.2 million that the administration wants to put under the system. Federal unions would negotiate terms of the test for half of the workers in the test program. It is not known how many of the 300,000 federal white-collar workers here could be included in the test group. They make up 13 percent of the total federal work force.

A spokesman for the Office of Personnel Management said yesterday that Stevens' plan is "unacceptable" to the administration.

Last month OPM said it would put the rules change into effect administratively starting in August unless Congress was working on its own plan. But OPM said it thought Stevens had agreed that an acceptable compromise could be worked out.

Under current federal rules most white-collar workers get within-grade pay raises every one to three years if they get satisfactory job ratings, which 99 percent do. Layoffs are supposed to be run on the basis of seniority, with the newest workers first to be RIFfed.

The White House-OPM plan would impose a standard five-level performance rating system on all government agencies. Employes' last performance ratings would determine eligibility for within-grade raises (worth 3 percent) and their standing during a RIF.

Under Stevens' proposal, half of the employes in the test group would be in agencies or portions of agencies where unions have exclusive bargaining rights. (Those agencies have not yet been determined.) Unions would be able to negotiate the terms of the performance rating system. Employes not covered by union contracts would have the right to be consulted on the terms of the system, but agencies would have the final say so.

OPM indicated it would fight the Stevens-union plan. "We've spent a lot of time with Stevens trying to reach a compromise," a spokesman said. "We don't need a test or demonstration project. We've been testing merit pay for supervisors and managers for several years. We know what things work and what things don't work."

Federal worker unions say the emphasis on the last performance rating rather than seniority would make it too easy for political appointees to punish good workers by withholding raises or to give them a bad rating, run a RIF and fire them.

Administration officials say that the present seniority system rewards mediocre performance and, during RIFs, protects less-competent but long-service employes at the expense of outstanding women and minorities who lack seniority.

Stevens plans to attach his compromise language to a merit-pay bill pending before his Civil Service subcommittee. Approval is expected at a mid-July meeting, which will be just two weeks before OPM's deadline.