It was a few minutes before 3 yesterday morning when the dancers asssembled on stage at Benny's Home of the Porno Stars for their final number.

As an X-rated movie flickered unnoticed on a screen in the back, the gyrating dancers -- most in advanced stages of undress -- stopped periodically to hug one another, pose for snapshots, or lean over a customer to have one last dollar bill tucked inside a black lace garter already bulging with cash.

Benny's, which billed its topless, bottomless show as "the most explicit on the East Coast," bumped and ground its way to a halt yesterday, the latest casualty of the commercial gentrification of Washington's once-booming porno district.

"Sexually oriented businesses," as they are politely termed, are being squeezed out of 14th Street, pressured by developers who find the sleazy neon strip between H and I streets Northwest at odds with their plans for expensive office buildings full of pin-striped professionals.

"This strip, for all intents and purposes, is already gone," lamented Benny's owner, Roger W. (Roddy) Simkins Jr., standing by the bar in the back of the smoky, mirror-lined room and shaking the hands of regulars who stopped in to have one last look and offer their condolences.

By daybreak, minutes after Simkins and about 25 employes and friends streamed out of Benny's after the final night of partying, developer Jeffrey N. Cohen, who owns the property, began pulling down the awning in front of the bar.

Then more than 50 volunteers from the Franklin Square Association got busy clearing broken bottles and debris from the curbside trees and painting plywood for a billboard reading "Franklin Square: Washington's Next Great Neighborhood."

The billboard now covers Benny's and three adjacent buildings, also owned by Cohen, which were the site of three nude-dancing nightclubs -- The Butterfly Club, The Cocoon and the Californian Steak House -- forced to shut down within the last year. Cohen expects to raze them to make way for a parking lot and, eventually, an office building or hotel.

"The beginning of the end is here for the infamous 14th Street porno row," proclaimed Art Schultz, executive director of the Franklin Square Association, founded last year by area developers and real estate brokers concerned with sprucing up the area's image.

"It's a changing neighborhood and, for a change, it's changing for the better," said Gary Leisch, owner of the La Prima chain of Italian gourmet shops, which will begin selling vegetarian pizza and pasta salad later this month from a new office building a block away from Benny's.

Although the adult bookstores and all-night porno theaters persist, only a few nude-dancing clubs remain, and those may not survive for long against the determined onslaught by the Franklin Square Association. The civic group has appeared before the D.C. liquor board to argue against renewing the clubs' liquor licenses and even has hired detectives to investigate whether prostitution or other illegal activites are taking place inside sex stores on the strip.

The Golden Eagle, a club on I Street around the corner from Benny's, already has taken down its signs advertising nude dancing and agreed to stop its sex shows altogether, according to Schultz. Another club, El Ceazar's Palace at 14th and L streets, was demolished in the spring and turned into a parking lot.

Down the block from Benny's, James Bakalis, owner of The Gold Rush, said it is "just a matter "It's a changing neighborhood and, for a change, it's changing for the better." -- Gary Leisch of time" before he decides to sell the building, which in better days housed a fancy fur and dress shop.

"The change is coming," said Bakalis, who is weighing several offers from developers.

Hanging in despite the loss of its liquor license earlier this year is This Is It?, which now offers female Jello wrestling in a bid to retain customers.

"We've been doing good," said owner Mike Hedi, who also owns the Adam & Eve video arcade and porno bookshop next door. The closing of Benny's, he said, will generate even more business for This Is It?, which has hired a number of Benny's dancers.

Meanwhile, after a period during which new buildings stood vacant, Franklin Square has become the fastest-growing commerical district in the city. According to the association, more than 3 million square feet of office space have been built in the area since 1981 and 87 percent of that now is leased, compared to an average occupancy rate in mid-1983 of less than 40 percent.

The biggest sticking point now is the Casino Royal building on the other side of 14th Street from Benny's. The building houses an X-rated movie theater, two adult bookstores, the Adam and Eve Model Studio, and the Paradise Escort and Model Service.

Under a plea bargain reached earlier this year with federal prosecutors, the building's owner, Herbert C. Cole, agreed to plead guilty to federal tax evasion and racketeering through prostitution and to pay the government $1.5 million from the sale of his building.

Developer Cohen says that the new owner of the building signed a lease with the existing businesses that expires in August 1986.

"When that closes, it's a whole new neighborhood," Cohen said.

Not everyone is thrilled at the prospect. Standing outside Benny's yesterday morning, Cowboy, the barker, reminisced about the good old days when nude nightclubs lined the street.

"In those days it was real competition," he said wistfully. "You had to outbark all the other doormen to get those customers in."

But at 2:15 a.m. yesterday, Cowboy found himself turning customers away.

"It's all closed," he told them. "That's it at Benny's."