When St. Patrick's Episcopal Church moved into a new $3.5 million building last year, the congregation in Northwest Washington staged an exultant celebration. There were balloons, a parade and a bishop to bless the building.

But a year later, the building at 4700 Whitehaven Pkwy. NW, which the church shares with its day school and nursery, has become the center of bitter controversy.

After 20 years as the school's director, Isabelle Schuessler has been fired by the Rev. S. James Steen, the parish rector for six years, in a dispute over dividing authority and funds between the church and the school under one ecclesiastical roof.

"It's a terribly, terribly sad thing," said one church member, who like many interviewed for this article asked not to be identified by name. "Mrs. Schuessler built up a wonderful school. But when the church moved right in with it, I think the minister wanted to show that he was in charge and she was too strong a figure to let him."

The controversy that erupted after the firing has led to angry denunciations of Steen by parents at the school, which enrolls 375 students from nursery through sixth grade. Building fund pledges have been canceled; 10 of the school's 27 trustees have resigned. One parent group is trying to form a new private school, which they hope Schuessler -- who is in the middle of a three-year term as president of the National Association of Episcopal Schools -- would head.

Last night about 200 parents crowded into the chapel of Mount Vernon College for a meeting about a new school, to be called the Washington Episcopal Day School.

Schuessler, who was greeted by warm applause, said she was a "consultant" to the group and described the new school's program but added, "In no way is this an effort to destroy St. Patrick's."

Robert Freer, head of the committee on the new school, said the committee already had supporters willing to guarantee $450,000 in loans and was close to finding a site. He said the school would be "church-related" but not under church control.

Episcopal Bishop John T. Walker, head of the Washington diocese, has strongly supported Steen's authority to fire the principal. At an emotional meeting in the church last Sunday he said the gathering had the atmosphere of a "lynch mob." Walker said he would resist efforts by parents -- 85 percent of whom are not parish members -- to take the school away from church control.

"The school has operated pretty independently for a long time," said Virginia L. Snider, president of the parents association. "It was the dedication of Isabelle Schuessler and the teachers that made it an excellent school and the energy and the money of the parents that built it . . . . Everyone had known it was a church school." But actually having the church in the same building as the school "and trying to run it is something different," she said.

Steen declined to be interviewed, but in a letter sent to parents he said he placed Schuessler on administrative leave Saturday because she "support[ed] efforts to begin a 'splinter' school." At the Sunday meeting, according to several people who attended, Steen said he could not function effectively as rector with Schuessler as principal, adding that the school needed a new leader because it had changed.

He appointed the Rev. Richard H. Downes to be interim director. Downes took over the post Monday.

Schuessler strongly denied she had cooperated with efforts to start a new school before being fired.

The school began as a nursery in 1956. After Schuessler became director in 1966, it added elementary grades, graduating its first sixth graders in 1974. In 1977, after a lengthy dispute with neighbors about zoning, it moved into a $1.5 million building on Whitehaven Parkway. The church moved last year to the new adjoining structure from a site at Foxhall and Reservoir roads.

With a tuition of $4,450 this year, the school enrolls mostly children from upper-income neighborhoods of Northwest Washington and close-in Montgomery County. Its recent graduates include children of banker Joe Albritton and Sen. John Danforth (R-Mo.). Its current group of parents includes Sen. Ted Stevens (R-Alaska) and journalists George Will and Bob Woodward.

The school's budget has grown to nearly $2 million a year compared to about $250,000 for the church.