The gypsy moth infestation that has devastated trees from Maine to Virginia seems to have peaked in the core counties around the District, but massive defoliation is spreading outward, especially to the south and west, according to state agriculture officials.

More than 590,000 Virginia acres were visibly defoliated this spring -- more than twice as many acres as last year -- by the moths in their leaf-eating caterpillar stage, said Sheryl Parker, gypsy moth program coordinator for the state. Totals aren't in yet for Maryland, but officials expect the number of defoliated acres to top 100,000 for the first time, despite a $2.5 million aerial spraying program.

The defoliation is expected to continue in Virginia as the gypsy moths, a European import, eat their way south from New England. The state's $1.28 million aerial insecticide program, financed by state, local and federal contributions, did not cover all the vulnerable acreage and the current fiscal crisis means program cutbacks are likely.

The moth did its first major damage in Maryland about 10 years ago, and moved on to the District and Virginia soon after. Governments are fighting back with aggressive and controversial aerial insecticide spraying programs, using helicopters and old DC-3 airplanes.

This year's infestation was particularly bad in Virginia's Shenandoah Valley, where views from scenic Skyline Drive are pock-marked with brown, bare patches, and in Prince William County, where insufficient funds combined with a spiraling caterpillar population to leave 9,000 acres severely defoliated -- up more than 400 percent from last year. Defoliation also has more than doubled in Anne Arundel County, said Sally Hughes, of the Maryland Department of Agriculture.

However, officials in the District, Fairfax, Montgomery and Prince George's counties believe the moth population has finally peaked and begun to decline. Good weather during the prime spraying period in early May made that program more effective, and natural killers -- particularly a virus common to the gypsy moth -- also reduced its numbers.

Defoliated acreage in Montgomery dropped from 8,279 to 3,417, even though the county sprayed 6,000 fewer acres than last year. "We saw a lot of areas {where the moths were infected} with the virus that naturally kills them," said Montgomery program manager Ruth Salvaggio.

"We think they have about peaked around here," George Kirschenbauer said of decreases in Fairfax.

In the wild, the gypsy moth population typically peaks and fades in seven- to 10-year cycles. But the spraying programs and suburban land uses may alter the pattern. Environmentalists, saying they are not worth the expense or the potentially toxic effects, have been particularly critical of spraying programs that use the insecticide Dimilin, which can harm crustaceans. when sprayed near water,

For now, Virginia's statewide gypsy moth problems are going to get worse because the moths are moving into counties in the southwest and the cyclical pattern has not yet begun, Parker said.

Virginia ran out of money for spraying this year and sprayed only 132,000 acres, down from 149,000, and the state's fiscal woes make budget-cutting likely. In Virginia and Maryland, the National Park Service pays half of the spraying costs, and the state and the localities each pay one-quarter.

Prince William had to drop 11,000 acres -- much of it land that is now defoliated -- from its spraying program because of the state shortfall, said Kim Bowling Largen, who runs the county's program.

All Northern Virginia jurisdictions also may suffer from a state plan to reshuffle spraying priorities. In the past the state has made protection of areas with more than five homes per 25 acres, including much of Northern Virginia, its top aim. In 1991, state officials may focus their efforts on public land, Largen said.