In the furor over conflicts of interest that has consumed the opening weeks of the Virginia General Assembly, some of the legislature's most powerful leaders may be using the chaos to weaken the state's ethics law substantially.

Last week, lawmakers rushed to dilute what they contend is an overly strict interpretation of a state Supreme Court ruling on the conflicts law, issuing dire warnings that the entire assembly will collapse if the law is not overhauled.

But some legislators say privately, for fear of publicly antagonizing their leaders, that key lawmakers have seized on the worst-case scenarios to weaken a law they never have embraced warmly.

"People have got to start looking at this thing with common sense," said Del. Gladys B. Keating (D-Fairfax), who supports some changes in the law but said the proposals under consideration are too drastic. "They know when something is going to put money in their pockets . . . . If you are wise you avoid even the appearance of a conflict."

The upheaval began early last week when Francis C. Lee, counsel to the attorney general, stunned a House committee with his interpretation of a 1984 state Supreme Court ruling that viewed the conflicts law much more stringently than lawmakers originally intended.

Two days later the state attorney general's office backed away from the severity of its original interpretation. But it still warned lawmakers that they could be in violation of the conflicts law if they vote on any issue affecting a profession or business in which they earn more than $10,000 a year or have a 3 percent ownership.

Until last week, legislators believed that the law required them to abstain from voting only on matters that would specifically affect themselves or their clients. A banker, for example, could vote on any banking legislation that did not affect his bank differently from any other bank in the state.

The attorney general's latest interpretation narrowed that view but still leaves many legislators able to vote.

Although about three-fourths of the members who sit on a House committee that helps regulate bank laws are involved in the banking industry, for instance, only a few would be barred from voting on banking legislation because they receive less than $10,000 a year in income from the stocks or positions they hold.

Many lawmakers complained, however, that even that interpretation is too strict.

House Speaker A.L. Philpott (D-Henry) speculated that delegates would be unable to vote on the state budget because it includes their own salaries; the attorney general's office later said that statement is incorrect.

Amid the scramble to modify the law, legislators tossed in an unexpected proposal that has nothing to do with the court ruling or the attorney general's interpretation.

Emergency legislation proposed by a House panel Thursday would exempt members from criminal penalties for some violations, make it easier for them to vote on issues in which they have a personal interest and make it more difficult to prove that a conflict had occurred.

The most controversial provision of that law would exempt state legislators from criminal penalties that still could be levied on local government officials who commit the same offenses.

"I can't go home and face the Chesapeake City Council and say we opted ourselves out of the law but left you in -- that would go over like a lead balloon," said Del. Thomas V. Forehand Jr. (D-Chesapeake), who added that although he opposes exempting lawmakers from criminal prosecution, he supports other major changes in the law.

The proposal would leave all but the most blatant conflict of interest questions, such as bribery, to ethics panels in the House and Senate rather than the courts.

The ethics issue has been heightened by criminal conflict of interest charges pending against state Sen. Peter K. Babalas (D-Norfolk), the Senate's fourth ranking member. Babalas is accused of voting to kill a bill that would have placed restrictions on second mortgage companies such as one that paid him $61,000 in fees.

Under the proposed changes in the ethics law, some of those criminal charges could not have been brought against Babalas.

Rather than focusing on drawing a strict law to deter wrongdoing, many legislators were voicing fears last week about being "entrapped" into violating the law innocently.

House Majority Leader Thomas W. Moss Jr. (D-Norfolk) said there may be a public perception that "we're liberalizing our ethics law," but he insisted some changes are necessary "so we can work in a citizen legislature."

Forehand, a Chesapeake lawyer, said he believes that if the court ruling is kept intact, it "would mean you wouldn't have any more lawyers down here."

Forehand said attorneys have so many clients, or law partners with clients, that they would be hamstrung in voting. There are 63 lawyers among the assembly's 140 members.

Other legislators say arguments such as those cloud the real ethics issues.

"I've never had much problem of understanding when I had a conflict," said Del. Ralph L. Axselle Jr. (D-Henrico), also a lawyer. "It's something you know or should know."

"If you receive more than $10,000 a year from some type of business, you ought not to vote on anything that affects it," said Sen. Richard L. Saslaw (D-Fairfax), a service station operator in Northern Virginia. "I don't know what is so difficult about that."

Some legislators say they would favor full, written disclosure of personal interests in an effort to ease concerns over legislative ethics.

However, neither sponsors of the House bill, which will be debated before the Privileges and Elections Committee on Wednesday, nor members of the Senate have proposed strengthening what many say is one of the weakest disclosure requirements in the nation.

Del. Theodore V. Morrison Jr. (D-Newport News), a chief architect of the House plan to soften the ethics law, argues that public exposure by the news media is the best bar to wrongdoing by officials.

"We're the biggest fishbowl of all," said Morrison, a lawyer and member of the inner circle of power in the General Assembly.

Morrison said members of the legislature know when their colleagues have special interests in issues and weigh that in their dealings with each other.

"We're not gullible suckers," he said.