Inside a small frame house off Slidell Road in Boyds, a rural Montgomery County farming area, Darrell Law, 84, sat on a battered living-room couch and warmed himself in front of a wood-burning stove.

"It's a damn shame what happened to those kids," he said of the six victims who died recently in a fire that gutted a condemned farmhouse just a half-mile up the road from his place.

"I knew a couple of them real good," he said. "I guess they were down there having a party. I knew they tried to fix that place up. I guess they just didn't have the money to do it right."

Law is one of the dozen or so residents who live along Slidell Road, a two-lane ribbon of blacktop where the fringes of modern suburbia brush against Montgomery County's agrarian past.

The turn-of-the-century farmhouses and tar-paper shacks that dot the hills and valleys there are part of a long-festering pocket of poverty that exists largely out of sight and out of the minds of county officials in Rockville, community leaders contend.

The tragic predawn fire on Jan. 11, which fire investigators are initially blaming on a wood-burning stove, dramatically underscores the county's acute shortage of low-cost housing and the impoverished conditions in which thousands of residents still live, they said.

Eleven people, including two children who died in the fire, lived in the farmhouse, even though its owner Harry Leet, a retired lawyer and county Board of Appeals member, had been ordered to board up the dwelling because of a long history of outstanding housing code violations.

The house had no central heating or running water and had broken windows, piles of trash, broken doors and structural defects, county officials said. They said residents had agreed to fix the place up in exchange for reduced rent.

County officials dispute that they have neglected the disadvantaged among the 700 residents of Boyds.

"The council has tried to go the extra mile for the people up there," County Council President William E. Hanna Jr. said. Noting that federal funds are drying up, he said that the county has a program to pave rural roads and has used federal block grant money to help individuals repair housing code violations.

In Boyds, two worlds exist side by side, often in stark contrast. Along Slidell Road, the modern brick homes and smartly renovated farmhouses of families that have moved there to enjoy the country are only over a hill or around a bend from an abandoned or dilapidated house.

"There are two Montgomery counties," said Peg McRory, a longtime county activist. "There are the remnants of the Montgomery County that used to be, which was a southern agricultural community. Over that has poured suburban development, which has quite ignored the old, except when it gets in the way."

The hamlet sprouted in the 1800s around a rail spur on the B&O line to Washington, where farmers would ship fresh milk to the city dairies 34 miles away and pick up supplies and mail.

Una Harner, 57, whose parents were tenant farmers in Boyds, remembers her early years there.

"When I grew up here, there were a lot of dairy farms and every farm had at least one tenant house for people who helped with the crops," she said. "We were poor, but I guess we didn't really know it. We always had plenty to eat."

Yet, in 1960, Boyds was identified as one of 65 pockets of rural poverty in the county. The areas were distinguished by large numbers of houses -- 7,790 units, according to the 1960 census -- that were dilapidated or had no indoor plumbing, according to county records.

Boyds and the other areas were targeted for rehabilitation by the federal War on Poverty, which drew a spate of activists to the community.

Many of them have stayed on in Boyds, helping to organize a day-care center, a federal credit union and other programs for the poor, said the Rev. Merritt Ednie, pastor of the local Presbyterian Church, who counts himself among the activists.

Although the county has not done a recent study on poverty, community activists said the Boyds area is still poor. According to the 1980 census, more than 3,100 houses across the county -- including some in Boyds -- are considered substandard because they lack plumbing and heating or are overcrowded. Of those, more than 600 have been condemned or are condemnable, according to county records.

Because of an acute housing shortage, the county has been reluctant to force people from substandard housing, said Richard J. Ferrara, the county's director of housing and community development. Instead, Ferrara said he has tried to work with landlords to improve properties. After the recent fire, officials moved to tighten housing code enforcement.

Leet was hit with eight citations Jan. 13 for code violations at another dilapidated house he rents out on Slidell Road, and on Jan. 17 inspectors returned and cited a third Leet property for code violations.

The county's effort to provide low-cost public housing was beset from the beginning by strong opposition from civic groups and from developers who feared that their property would be devalued. After 20 years, even its strongest advocates say the program has failed to meet the needs of the county's poor.

What is more, housing officials and community leaders say there is evidence that the county's current development boom is drawing to the area a new generation of disadvantaged people who are attracted by jobs in construction and other blue-collar and service fields.

"The county's housing problem was never solved in the first place," said Joyce Seigel, a county Housing Opportunities Commission spokeswoman. "Now there are county residents who have got caught up in the county's development boom and just have no place to go."

The housing commission owns 2,000 public housing units, while 2,000 other residents in the county of 610,000 have their rents subsidized through federal housing programs. Even so, more than 5,000 families are on a waiting list for housing, Seigel said. Meanwhile, construction of subsidized housing in the county has come to a virtual standstill because of cuts in federal funding, a housing commission budget officer said.

Boyds resident Darrell Law, whose own frame house has been condemned by the county, said he has no other place to go.

"I reckon this place keeps me dry and keeps me warm, so I ain't got nothing to kick about. I'm just poor," he said. "I can't afford to pay no rent, so I just can't up and move."