SUSAN SUDDATH had been providing day care in her Damascus, Md., home for nearly 20 years when she was told the ceiling in her basement was too low. Almost six feet tall herself and able to stand in the basement without stooping, Suddath assured the inspector she would be the tallest person in the room. Regulations, she was told, could not be bent.

Renee Cuchetti, of Birmingham, Mich., was arrested for caring for two children too many in her home. She had a license from the state to care for up to 12 children; her city's zoning ordinance allowed only six.

Joy Prentice wanted to serve hot meals to the children in her Bloomington, Minn., day-care home. But because she cared for more than five children, her home was classified as a nursery school under local regulatory statutes -- requiring a separate, commercial kitchen. To comply, she would have had to install additional storage facilities (including refrigerators and freezers), food preparation areas, and a sink for hand washing. Her day-care children now eat cold meals.

In each of these cases, and thousands like them, stringent local regulations have restricted the growth of a critically needed community service -- day care. Most of these regulations were adopted to ensure a safe, healthy environment for young children, while respecting the interests of the community. In many cases, however, the result has been the opposite.

Federal and state governments are now under pressure to devote more money to increasing the supply of day care. But local governments -- through regulatory obstacle courses -- are inadvertently working to impede its growth.

The need for more day-care facilities is clear. At least 14 million preschoolers nationwide have parents who work full-time, but only 10 milli day-care spaces are available. Today nearly half of all women with children under one year old are working, and the number of preschoolers requiring day care will increase 39 percent by 1990. Indeed, not only do both parents in the average American family now work, but the traditional babysitters -- relatives and friends -- have also joined the work force.

In many areas, commercial day- care centers have emerged to fill this need, but their relatively high cost ($2,000 to $3,000 per year for a 3-to-5-year-old) has made them unaffordable even for many middle- income families. Family day-care homes are more affordable (about $1,000 less per child) and often preferred. They also offer convenience and a home-like atmosphere.

Most family day-care providers are in the business because they like children and wish to supplement their families' incomes (or actually support their families). The typical provider earns less than $6,500 a year and works more than 11 hours a day. Unfortunately, unnecessary expenses or bureaucratic red tape can easily tip the scale, turning a marginally profitable endeavor into a frusrating and expensive one.

To avoid this, many day-care providers either choose not to operate, or operate without state and local government sanction: An estimated 90 percent of home providers operate "underground." Either way, it is the child in need of day care who loses. Unregistered providers do not show up on public or private referral lists. But even less accessible (and countable) are the potential providers deterred by the morass of regulations from entering the day- care market at all.

Primary regulation of day care occurs at the state level. More than half of the states require day-care homes to be licensed. In some states, if a person cares for even one unrelated child in a private residence other than the child's own, that person is considered to be operating a day-care facility and is required to obtain a license.

State standards generally govern number and ages of children that can be cared for, amount of indoor and outdoor space provided, quality of meals and snacks, program content, parental involvement, etc.

Although state standards have restricted the number of day-care spaces in centers, the labyrinth of costly and complicated local regulations is far more detrimental to the availability of family day care. The highest hurdle facing family providers is often the first -- obtaining the approval of local zoning officials. Although the most restrictive kind of regulation, zoning statutes have the least relevance to the quality of care and the safety of the children.

Most city zoning commissions consider day care to be a small business and prohibit programs from operating in residential areas. This prohibition extends even to individuals wishing to use their own homes to care for a few neighborhood children.

The llogic of this restrictive zoning policy was observed by one frustrated would-be provider before the D.C., Board of Zoning Adjustment: "You're telling us we cannot operate a day-care facility in a residentially zoned, middle-class neighborhood with a large number of working mothers, but we can operate a center in a commercial zone between two topless bars."

On the other hand, there are zoning commissions that refuse to define day care as a commercial activity, prohibiting the establishment of facilities in commercial areas. As a result, businesses cannot offer day care to their employes on or near their premises.

Although providers can apply for a zoning variance or a conditional-use permit in most cases, the process is neither cheap nor easy -- and not always successful.

Like zoning codes, some building, fire and health regulations are inappropriate, ineffective and costly when applied to day care. A home that has been judged safe by building and fire inspectors for ate residents must usually meet a host of additional requirements for the care of neighborhood children.

Many of these regulations, such as the one stipulating separate toilet facilities and requiring centers to have one toilet for every 10 persons, have been borrowed from codes designed for institutions: schools serving larger numbers of children, or hospitals and orphanages providing round-the-clock care. Applying restaurant standards or requiring the separation of public and private foods is also common.

According to David Beard, director of day-care licensing in Texas, "Legislators found it all too convenient to jam day-care licensing into existing residential child-care licensing laws, regardless of lack of fit."

To comply, providers sometimes spend thousands of dollars to renovate their homes. In some cases, the required renovations are impossible to implement, preventing many family providers from increasing enrollment i their homes or from operating at all.

In short, many local day care regulations are counterproductive: Not only are they unnecessary and ineffective, but they serve to drive day-care providers out of business. Primary responsibility for the welfare of children should be returned to parents, who, through direct contact with the day-care facility, have ample opportunity to assess the care their children receive.

Meanwhile, what's happening to the estimated 4 million children who desperately need day care? In some cases, one parent must stay home, relinquishing needed income. Other families do not have that option, and young children are left alone. Surely, the authors of the plethora of needless day-care regulations did not intend to promote this newest form of child abuse.