When President Clinton signed a federal budget measure Oct. 21 that bars government funding of needle exchange programs for D.C. drug abusers, Whitman-Walker Clinic officials were ready with a plan to get around it with a privately financed program.

But six weeks later, District officials are refusing to allow the new private group to go into business -- even though they agree that the needle program would prevent the spread of the AIDS virus and other blood-borne diseases. A city AIDS administration official said that before anyone hands out clean needles to drug abusers on the streets of the city, the D.C. Council must pass a law to authorize the group to proceed.

Whitman-Walker officials say that interpretation is incorrect, and council staff members haven't determined who's right.

Before the ban took effect, a four-member Whitman-Walker Clinic crew traveled around the city, distributing 17,000 needles a month at regular stops under a contract with the D.C. AIDS Administration. That stopped the day the federal budget was accepted by President Clinton.

Whitman-Walker promptly transferred the unit to a new, unrelated corporation so the needle exchange program would not endanger millions of dollars in federal and District funds that go to the clinic, one of the nation's largest HIV-AIDS service providers.

Since then, the crew, known as Prevention Works Inc., has conducted AIDS tests, distributed injection supplies and tools and urged drug users not to share needles.

"I feel stuck in a corner," said Paola Barahona, an AIDS prevention and education specialist with Prevention Works. "They call here, asking where we are, saying they need us."

The impact will show up in about a year when HIV infections become evident, she said.

"It is so sad," said Patricia Hawkins, associate executive director of Whitman-Walker. "The amount of money it costs the District not to have it in terms of providing care for the people being infected, much less the emotional cost of losing people we don't have to lose, is great. This is one of the silver bullets in the war on HIV."

Hawkins said the city is misreading the congressional intent.

"We certainly thought this would be resolved by now, I must tell you," Hawkins said. "We submitted this {to the city} before the budget bill was passed, and they didn't do it fast enough. My sense would be that they don't want to do anything that could potentially jeopardize their federal and District money."

But the congressman who introduced the needle amendment said yesterday that even though he thinks needle exchange programs do not work, his purpose was not to outlaw all of them in the city.

"My intention was purely to get taxpayer dollars out of providing needles to drug addicts," said Rep. Todd Tiahrt (R-Kan.), a conservative member of the House Appropriations Committee.

"But it's a free country," he said. "We spend money foolishly on other things, and if a private group wants to get together and fund this exchange program on their own, this country can afford to spend money on a project that I don't think works."

Researchers have found in repeated studies that needle exchanges are an effective way to slow the spread of HIV and other blood-borne illnesses without increasing drug abuse. But even some officials who acknowledge the validity of those studies remain uncomfortable with the idea of assisting drug addicts.

In 1996, the D.C. Council passed a law authorizing the city Health Department to provide needles, and Whitman-Walker was awarded the contract to carry the program out. The effort was paid for with $210,000 from the District and $50,000 from private donors, clinic officials said.

Tiahrt's amendment bars the use of federal and local dollars by the District government, but now city officials say the problem is that they do not feel they have the authority to delegate that needle-distribution role to a third party. "We are very disturbed, but our hands are completely tied," said Stephen Miller, deputy administrator for AIDS administration. A senior D.C. Council staff member said yesterday he knows of no needle exchange proposals that have been presented for legislative action.