Alexandria students who have AIDS will be allowed to "participate fully" in school programs unless officials determine that they present a health danger to students or teachers, according to a written policy proposed by Superintendent Paul W. Masem.

The policy provides for an infected student's temporary removal from school during a review of the child's situation by health and school officials, but the proposal would not require removal.

"Temporary or permanent removal of a child from school shall be on a case-by-case basis" after consultation with school and health officials, according to the proposed guideline, which is to be discussed by the School Board at its regular meeting Thursday and voted on at a later session.

Asked why he favors a written policy on handling AIDS-infected children, Masem answered: "Prudence."

The proposal asserts that an "appropriate alternative educational plan" will be provided for children who are permanently excluded from school after a review of their condition by officials. He described the proposed review process as one "similar to a handicapping situation."

Alexandria has been following state health policy on students with contagious diseases, which appears more restrictive than the proposed city guideline. The Virginia policy states: "Persons suffering with contagious or infectious diseases shall be excluded from the public schools while in that condition."

There are no reported cases of AIDS among students and staff members in Alexandria's school system, Masem said. He said he ordered the staff to prepare an AIDS policy soon after he came to Alexandria last fall from Ames,

Iowa, where he put in place a written policy on the subject.

The superintendent said his proposal this week is not a reaction to a controversy in Fairfax County, where a parent last month sued the school system after her child was barred from kindergarten because she has AIDS.

The Fairfax School Board has since decided that the child can be readmitted to class. And on Dec. 26, in a policy reversal, the board ordered Superintendent Robert B. Spillane to draft written guidelines on children with AIDS for discussion at its meeting Thursday.

Alexandria's guidelines for students also are being proposed by Masem this week for school employes with AIDS. These workers "will continue their customary employment so long as they are physically able . . . and {do} not create a substantial risk of transmission of illness to children," the proposed policy states.

School and health officials, on a case-by-case basis, would determine if the staff member should be reassigned. The superintendent could decide about "continued employment" of the staff member. That decision could be appealed by the employe to the School Board within 10 working days. POLICIES IN AREA

Proposed in Alexandria: Temporary removal of student from school only if deemed necessary in a case-by-case review.

Prince William County: Policy is similar to Alexandria's proposal. Was adopted in January 1987.

Arlington: Policy is similar to Prince William County's, but evaluation must be done within five working days. Was adopted in April.