More than 100 elderly mental patients at Western State Hospital in Staunton, Va., would be moved and their ward would be closed under a plan approved by state officials yesterday in response to budget cuts ordered by Gov. L. Douglas Wilder.

The jammed Northern Virginia Mental Health Institute in Fairfax, designed as a short-term facility for Northern Virginians, would not be able to buy space at private mental hospitals as planned to treat more mentally ill people, for the same reason.

Institute officials also say they would not be able to meet federal Medicare standards in one of three units because they could not afford to hire enough nurses there.

Those moves are included in a plan proposed by the Virginia Department of Mental Health, Mental Retardation and Substance Abuse Services and endorsed unanimously yesterday by the state board that oversees the department. Wilder still would need to approve the plan as part of his effort to make up for a $1.4 billion shortfall in state revenue. He will announce his specific plans Sept. 14.

The board's proposal involves a cut of 5 percent, or $32.1 million, in the department's general fund. Of a $41.4 million reduction in the department's total $1.14 billion two-year budget, $29.5 million would come out of state mental health and retardation institutions, $8.5 million from community services boards and $3.4 million from central administrative office functions.

While community services boards fared better than many had feared, with only a 2.25 percent cut in their base budgets in fiscal 1991, the state institutions took a harder hit.

The new budget plan calls for deferring the purchase of 15 to 20 beds at private hospitals in Northern Virginia for mentally ill patients, at a savings of $1.4 million in fiscal 1991. The problem is that both the Fairfax institute and Western State, the long-term mental hospital where Northern Virginians are treated, are full.

"It's a real bind, because if we're full, the only place to go is Western State, and . . . they are really pushed to the limit," said Robert E. Strange, director of the 114-bed institute.

"We will not be closing any beds or anything like that," he added. "We will have to scrape the bottom of the barrel and not have as good staffing as we should have."

Already, Medicare has been alerted that the facility will not be able to staff one unit, the one for the least severely ill people, with enough nurses to meet standards.

Closing the geriatric center in the Staunton hospital would reduce Western State's capacity from 697 to 567 patients and could lead to layoffs of 175 employees, according to the plan. The hospital will start making plans next week for moving about 130 elderly patients to other state facilities, all of them hours from Northern Virginia, said Richard Wills, spokesman for Western State.

"I imagine we will start hearing from families next week," Wills said. "I imagine it will be a mess."

Several community mental health advocates said yesterday they were pleased with the package because it protects most local programs, which have received new emphasis in recent years.

"The {department} did a tremendous job of lessening those impacts at the community level," said Christopher J. Spanos, a veteran mental health lobbyist.

However, William Snavely, former president of the Alliance for the Mentally Ill and a longtime Virginia mental health advocate, criticized Wilder for not protecting the entire department from deep cuts.

"The only people who are suffering {from Virginia's revenue shortfall} are the poor and the disabled and the schools," he said.

Staff writer John F. Harris in Richmond contributed to this report.