When they hear demands for more high-density housing, Prince George's County leaders instinctively flinch, having watched garden apartments of the 1960s turn into slums of the 1970s.

But this time they are witnessing a push of the county's own creation, the quasi-private Prince George's Economic Development Corp., a streamlined, aggressive organization in the shadow of county government that is becoming increasingly influential in shaping public policy.

With its record of helping to guide the county into its greatest period of economic renaissance, the corporation's recommendations may be difficult for political leaders to resist.

The development agency's urging that emphasis be placed on construction of luxury apartments and town houses for the upper middle class is but one illustration of how the county-financed development corporation is exerting its influence. The recommendation is expected to be delivered in the next few weeks.

Since its formation in mid-1983, the agency has stretched into areas not traditionally associated with economic development, such as recruiting teachers and finding jobs for welfare mothers. It is unabashedly probusiness and not reluctant to prod a sluggish county bureaucracy into creating an environment in which development will grow and prosper.

"Their single responsibility, without any government or political interference, is to look out for the interests of the county and not be sidetracked by other issues that the county government would have to look at," said Edmond B. Cronin, president of the Greater Washington Board of Trade, a regional organization that markets the Washington area.

However, at least one council member is concerned that the de- velopment corporation may be moving too far beyond public oversight. When word leaked that a $30,000 agency-commissioned study on housing needs called for higher-density housing and criticized the permitting office as understaffed and overbearing, council member Anthony Cicoria asked that the corporation officials report to the council regularly.

"I feel we should look at what {the corporation} does a little more closely," Cicoria said. "A lot of times we don't know about these studies until we read about them in the paper. When you are dealing with taxpayers' money, there should be a check and balance."

The agency was born in the dawn of County Executive Parris Glendening's administration as the brainchild of Lance W. Billingsley, a politically active lawyer and Glendening's top adviser, who now is chairman of the 23-member corporation board. It was 1983, and the county was going through one of the toughest periods of its history.

Four years of a voter-imposed tax freeze had left the county with near-empty coffers and a crumbling infrastructure. The school system suffered from teacher layoffs and budget cutbacks. But on the horizon were bullish area developers looking for cheap land and a helping hand from politicians. County officials believed that it was time to act.

What was most needed, county officials argued, was an organization slightly outside the realm of government that would take the day-to-day politics out of development and be an advocate for business.

"We consulted with the business community, and their response was {that} business people ought to speak to business people," Glendening said. "This is an agency created by county government and sent off like a child from its parent and then supported. They are given directions and goals, but we do not try to tell them how to do it."

Economic development had been handled by the Department of Program Planning and Economic Development, an agency created in March 1983, two months after Glendening took office, out of the Department of Housing and Community Development. The development department operated with 16 employes and a $502,270 annual budget; its primary function was to market the county and recruit businesses.

By contrast, the development corporation, which began operating in July of that year, has a staff of 20 and a budget of $1.3 million, of which $1.1 million is a direct grant from county government, which contracts with the corporation for its services. The remainder of the budget comes from the state and private sources.

Prince George's is the only county in the region that has a private corporation handling its economic development program. Montgomery County's economic development department has 24 staff members and a $1.8 million budget; Fairfax County has a 23-member staff and $2.45 million budget, and Arlington has a 10-member staff and $619,000 budget.

Headquartered in the sleek new Inglewood Business Park, six miles from the county seat in Upper Marlboro, the development agency has evolved into an organization that has become virtually synonymous with the economic development boom that has taken hold in the county in recent years.

"The day-to-day operations are being conducted by professional people, as opposed to the old days where they didn't have enough staff," said Alvin A. Turner, a corporation board member and executive vice president of Lawrence L. Levin and Co., the developer of the $1 billion Presidential Corporate Center off Pennsylvania Avenue near Forestville. "Economic development is more in the public eye because of the achievements since the institution of this approach."

And, like the private group that shepherded Gov. William Donald Schaefer's revitalization efforts when he was mayor of Baltimore, the agency and Billingsley are closely aligned with the long-term success of Glendening's administration.

The most important program the gency administers is the priority project program, a select list of key development projects that are put on the fast track for county permits and licenses. Included in the program are the $1 billion PortAmerica development and the Bowie New Town development. In exchange for inclusion in the program, developers are asked to help the county on politically sensitive issues by building day care centers and hiring minority subcontractors.

With a growing and increasingly vocal black community in the county, the agency took the lead in helping minority businesses take part in the economic boom by forming the Minority Business Enterprise Institute, a safety net of resources for minority businesses.

The development agency dabbles in other areas. It has helped recruit teachers for the school system, runs a program for budding entrepreneurs and has encouraged developers to invest in the older communities inside the Capital Beltway.

"When we first formed, we stressed . . . that economic development has to translate into providing better opportunities for every citizen," Billingsley said. "An economic development body had to have greater scope, more responsibility. We need to be in a position where, if necessary, we can take an adversarial position."

The recommendation for higher-density housing may become the clearest example of the agency's willingness to square off against county government -- even to differ with its patron, Glendening.

The housing study, completed last week but not yet released to the public, concludes that developers see a pent-up need for multifamily housing for the middle class and the affluent. County policy during the past decade has been to foster construction of moderate- to high-priced single-family homes, and Glendening said he would resist any attempt to change it.

"That recommendation is not consistent with my policies, and I will not be supporting it," Glendening said.