A controversy over public housing that began here three months ago when the mayor demanded the resignation of the housing commissioners has taken a new twist, with the FBI investigating the housing director for possible misappropriation of public funds and with the commissioners filing suit against the mayor.

At issue is whether the city's housing commission -- the landlord for one of every six Annapolis residents -- has been lax in managing the city's 10 public housing complexes and whether the commissioners ignored allegations that led to the federal investigation of housing Director Arthur Strissel.

"People have walked away from this for 13 years," said Mayor Dennis Callahan, who took office in December. "It's no shock to me that things are where they are now. The writing was on the wall. I think this is a natural culmination of events."

The controversy is the latest in a series of complaints about public housing in Annapolis, where widespread gentrification during the past 15 years has forced low-income residents to relocate at projects in the farthest reaches of town. Over the years, tenants have complained that city officials have been more concerned with developing the city's booming historic district than providing adequate accommodations for more than 5,000 public housing tenants.

The five unpaid commissioners are responsible for administering the city's public housing, which is financed with tenants' rents and $500,000 a year in federal funds. The housing director, who is paid $47,000 annually and appointed by the commissioners, oversees the daily operations of the housing authority.

The current conflict began in February when Callahan called a meeting of the five commissioners to discuss vacancies in 60 of the city's 1,155 units and complaints that the commissioners were insensitive toward their tenants.

A few days after the meeting, city officials confirmed that the FBI, at the request of the U.S. Department of Housing and Urban Development, was investigating allegations about Strissel's possible use of public funds to renovate several businesses he owns.

Strissel, who was appointed housing director 12 years ago after serving as campaign treasurer for then Mayor John Apostol, said he has not done anything wrong.

Amid the confrontations involving the mayor, the commissioners and the housing director, a group representing the city's public housing tenants decided to resurrect complaints about the city's management of public housing complexes and about Strissel in particular. They filed a formal complaint with the city two weeks ago saying, among other things, that the commission had mismanaged one housing complex and that commissioners failed to attend meetings.

Callahan, too, complained about Strissel, saying he has used his position as housing director to exert control over the commissioners, who are appointed by the mayor to five-year rotating terms.

"It was a classic case of the tail wagging the dog," the mayor said.

When he came to office, Callahan was far from a public housing activist. He said he knew only two of the commissioners, and called the initial meeting in February to discuss issues raised by tenants. During the meeting, he said, one commissioner asked if he wanted the group to resign and he decided, on the spur of the moment, that he did.

Under state and federal regulations, Callahan has no power to remove housing commissioners unless they are found guilty of neglect or impropriety at formal city hearings. So far, only one of the five commissioners has heeded his request to resign and she was replaced by a Callahan ally.

Last week a Circuit Court judge gave Callahan the go-ahead for a hearing on the tenants' complaints after the four commissioners filed a civil suit against him charging he was too biased to conduct a hearing.

The hearing was conducted behind closed doors on May 1. Neither the commissioners nor the mayor would comment on the proceeding, other than to say that it will continue. Commission Chairman Edward Pettigrew has vowed that he and his three colleagues will fight the mayor's call for resignation, and has accused Callahan of waging "a personal campaign to seize power."

Although it seldom has been displayed so publicly, controversy is not new for either the housing commission or for Strissel.

A few years ago, city officials said, a group of tenants accused Strissel of ignoring their problems and demanded his resignation. Housing authority critics said the tenants' complaints date to the late 1960s and early 1970s when urban renewal began in earnest in the historic district of Annapolis near the state capitol.

It was then that many blacks, who now compose 98 percent of the public housing dwellers, were displaced from neighborhoods near the city dock and forced to move to new public housing complexes farther from shops and transportation.

Carl Snowden, a City Council member whose ward includes 220 public housing families, helped the tenants file a racial discrimination complaint with HUD in 1982. The agency ruled that the housing commission had discriminated and found that low-income whites more often were placed in downtown public housing, while blacks were likely to be assigned farther away. The complaint was passed to the Justice Department, which decided no further action was warranted.

"This is not an issue that just developed," Snowden said. "Tenants have been complaining about the lack of sensitivity of Strissel for years, but it always fell on deaf ears."

While Callahan's debut as a public housing activist has encouraged the tenants, some of whom picketed outside housing commission meetings carrying placards stating "We support Mayor Callahan's Call For Resignations" and "Strissel Must Go," it remains unclear whether the controversy will have an effect on public housing in the city.

But amid the flurry of charges and countercharges, some of the housing commission's critics think things are looking up.

"The housing authority will never be the same again," said Snowden. "Already, all the commissioners understand that they have a greater oversight responsibility. You can rest assured it's not going to be one of these once-a-month jobs anymore."