After months of wrangling, officials at the Hospital for Sick Children agreed last week to save the hospital's landmark building, ending what observers say was the most racially divisive preservation battle in recent memory.

Under the agreement, the original Normandy-style hospital on Bunker Hill Road NE will be renovated. But a wing added a few years later will be destroyed to provide room for an 80-bed addition that hospital officials have said is needed to serve the city's growing number of babies born to drug addicted women or receiving little or no prenatal care.

Hospital officials had wanted to raze the 60-year-old building that has long been used as an administration building to make room for a larger, more modern treatment facility.

That was until a group of well-connected women, including granddaughters of the hospital's founders and 13 past board members, interceded, successfully petitioning the city to declare the building a landmark and deny it a demolition permit.

The group argued that the building was significant because it was designed by prominent architect Nathan Wyeth, whose work includes Key Bridge and the Oval Office.

Hospital officials said the old building was infested with termites and that to renovate it would be more costly than building new. They also said demolishing it was essential to provide the design needed for its special mission. D.C. law allows landmarks to be destroyed if there are overriding social arguments for doing so.

The hospital's proposal drew widespread support from the medical community, including heads of the city's other hospitals.

It also won support from civic groups and elected officials, including local advisory neighborhood commissioners, council member Harry Thomas Sr. (D-Ward 5), Del. Walter E. Fauntroy (D-D.C.) and weekly newspaper publisher Calvin Rolark, and president of the United Black Fund, which gives money to the hospital.

During a hearing on the issue, some hospital backers charged that the preservation battle by a group of wealthy white women was a rich versus poor, white versus black issue. Most hospital patients today are black and 92 percent of the hospitals bills are paid by Medicaid. In a letter to the city, Rolark called the preservation effort a "well-financed vendetta" that was "racially motivated under the guise of preservation."

Preservationists denied racial or economic overtones to their interest. They supported the expansion, they said, but felt it could be done without razing the Wyeth building. They even hired an architect to show how this could be done. In April the city ruled that the hospital had failed to exert "good-faith efforts" to save the building and ordered it to try harder.

This week, Jane Suydam, leader of the campaign to save the building, hailed the agreement as a victory. "It proves that historic buildings can be preserved even under the most difficult circumstances," she said.

Hospital spokesman Jed Nitzberg said the hospital gave in because it could no longer delay the project. "Everybody was waiting. The children were waiting. We had to do something to get this building built."

He said the new plan will result in the loss of 1,500 square feet of therapy area and 2,000 square feet of administrative space. The two-story addition still includes an underground garage. The $16.5 million project is scheduled for completion in the spring of 1993. Nitzberg said the preservation battle delayed the expansion one year.