Immigration and Naturalization Service Commissioner Alan C. Nelson dealt a serious setback yesterday to congressional efforts to extend the May deadline for the first amnesty program for illegal immigrants in this country, saying such an effort would be "ill-advised and shortsighted."

Nelson warned that attempts by some House members to seek an extension for the one-year program could backfire, causing some illegal immigrants to lose their one-time opportunity to apply for legal status by waiting to file because they mistakenly believe an extension already has been granted.

Nelson was referring to a bill filed recently by Rep. Charles E. Schumer (D-N.Y.) and 23 other House members to extend the amnesty program for one year beyond the May deadline.

Amnesty, a four-step process that leads to permanent residency, is part of the new immigration law passed by Congress in 1986 that also imposes stiff sanctions against employers of illegal immigrants.

The amnesty program passed the House by a margin of seven votes, and Nelson pointed to that yesterday in support of his contention that the attempts to extend the program are likely to fail.

"I'd say to those who are talking about pressing for extension that they will have to think real hard whether they are going to be the cause of people not coming foward," Nelson said. "If you talk about extension, people will be confused. They will either think an extension has been granted or will be granted and they'll say 'Gee, I don't have to hurry.' "

As of Dec. 31, 1,148,057 illegal immigrants had applied for amnesty, and Nelson said he sticks by previous estimates that another million will apply before the end of May. The INS has approved 330,526 and has turned down 6,449.

Schumer said yesterday he is "very disappointed" that Nelson had not endorsed the idea. Schumer has argued that the amnesty program should be extended because the INS has been slow in issuing approvals and fewer immigrants than expected have applied.

"By Commissioner Nelson arguing that it can't pass, it tends to be a self-fulfilling prophesy," Schumer said. "If {Nelson} was for {the legislation} it would sail through Congress in a few weeks time." But Schumer said he will continue to "fight for it and I think we still have a pretty good shot."

INS officials also revealed that next month they will launch a pilot project in several cities to audit businesses randomly to check if they are employing illegal aliens. The pilot project, expected to go nationwide in April or May, is part of the INS' enforcement of employer sanctions.