Gov. Harry Hughes, saying "deplorable" housing conditions remain in some parts of this relatively affluent state, pledged today to make improvements in low-income housing a top priority of the upcoming session of the General Assembly.

Hughes said his so-called housing initiative, to be presented in the last budget of his eight-year tenure as governor, will represent a "milestone" in his public career and will be "equal in importance" to programs funding Chesapeake Bay improvements and youth services that he got through the legislature during the last two years.

Among the proposals this year is a program to allow the state, for the first time, to subsidize rental costs for low-income households, which state officials define as households bringing in $10,000 or less. Currently, all rental subsidies are funded by the federal government.

Another proposal would, for the first time, inject state funds into financing construction of housing projects that devote a portion of their units to low-income residents.

And another program would assist Maryland nonprofit agencies in finding and purchasing housing for especially hard-to-place groups, including the mentally retarded.

"Housing deserves this kind of effort," Hughes told members of the Maryland Association of Housing and Redevelopment Agencies, an organization of local housing officials meeting here today.

Hughes declined to specify how much new money -- above previous appropriations -- he will devote to the housing programs. He said it will be less than the $59 million recommended earlier this fall by a state commission charged with advising officials on housing policy.

State officials approved about $12 million in new funds for youth programs last year, and, the year before that, a $38 million package for cleanup and other improvements to the Chesapeake Bay.

"It would be the first time we would be putting significant state funding into housing costs for the very, very low-income," said Ardath Cade, an assistant secretary of the Department of Housing and Community Development, who has worked on the housing proposals.

"We are already very active in helping people with incomes of between 18 and 20 thousand dollars a year, particularly in our mortgage assistance program," she said.

But little state money, and increasingly fewer federal dollars, are available to help those with incomes under $10,000 a year, she said.

Besides making homes affordable, Hughes said, "decent homes must be assured to all Marylanders . . . . A staggering, sad fact in 1985 is that in Maryland there are some 30,000 homes that do not have indoor plumbing, a deplorable situation that we cannot allow to continue."

Problems with the affordability and quality of housing for low-income people have attracted increasing attention in Maryland in recent months.

In March, a state Housing Policy Commission report noted that 71 percent of the state's rental households cannot afford to buy a home.

The report said that is in part because median home prices have risen far faster than incomes in the state over the last two decades -- a 390 percent increase in home prices versus a 274 percent increase in median incomes. Rents have increased 236 percent.

The report also said that if recent trends continue, by 1990 the demand for low-income housing units will exceed the supply by at least 86,500 units.

And although the state has made large gains in reducing substandard housing over the last two decades, the report said, "the overcrowded conditions and substandard housing units in Maryland remain a serious problem."

The commission's report singled out Baltimore City and along the Eastern Shore.

Part of the reason for that, state Del. Anne Perkins (D-Baltimore City) said, is that there are no minimum housing standards statewide, and efforts to pass them have failed repeatedly in the legislature.