A federal appeals court struck a blow yesterday for that drink that washes down fish sticks, quells school lunchroom rebellions and lifts the spirits through a straw: chocolate milk.

The 4th Circuit Court of Appeals ruled that the Agriculture Department had been too hasty in dropping the beloved flavored beverage from a food program for low-income women and children.

Word of the ruling reached the Washington attorneys who argued the case late yesterday afternoon.

"Oh wait," said Greg Walden of the Justice Department, who presented the case against the beverage. "Oh, shoot! I'm sitting down for this."

"I'm overwhelmed," said Peter Barton Hutt, an attorney for the Chocolate Manufacturers Association of the United States, which filed the suit against the government in 1983. "I'm very pleased, I must admit."

The case revolved around whether the USDA gave chocolate milk advocates enough of an opportunity to present their views before dropping the beverage from its Women, Infants and Children's program.

Walden argued that the agency had given sufficient notice by publishing in the Federal Register in 1979 a set of proposed regulations that reflected an effort to reduce the sugar content of the approved foods in the federal program.

The rules first allowed chocolate milk, but the agency changed its position after receiving written testimony against the beverage from 78 individuals.

Walden said chocolate manufacturers should have known enough to speak up for the beverage, even though the agency did not specifically signal that chocolate milk was in trouble.

Hutt characterized Walden's argument as "utter nonsense . . . . This came like a bolt out of the blue to the industry."

While the chocolate milk ban did not represent a great loss of money for the chocolate manufacturers, Hutt said, they were greatly distressed by "the principle of the matter and the precedent it set.

"There had never been a nutrition regulation in all of history that took the position that chocolate milk was not a nutritional food."

If they had been given the chance, Hutt said, the manufacturers would have provided evidence to USDA that chocolate milk is equally nutritious as regular milk, costs the same and causes no more cavities.

Besides, he said, children like it. "What good is it to have a product for children who won't drink it?"

To that, Walden countered: "If you want flavored milk, you could always go down and buy the chocolate powder and flavor it yourself. Haven't you ever done that when you were a kid?"

In their 22-page ruling, the appeals court judges did not take a position on the merits of chocolate milk. Their opinion said only that the chocolate milk manufacturers "and other interested parties at least should have had the opportunity" to present their arguments. Unless the USDA appeals the ruling, it must reopen the comment period.