OCEAN CITY -- This holiday weekend, if the weather's right, perhaps as many as 300,000 persons -- more than ever before -- will come to the barrier island known as Ocean City.

They will descend on the 3.8-square-mile seaside community of 7,000, where success depends on sunshine and the battle for the buck is very serious business. By the time they leave Sunday night, they will have spent maybe $8 million on everything from french fries and funnel cakes to ocean-front hotel suites and room-service dinners.

Few of them will think -- or even know -- about the power struggles and increasingly intense political atmosphere that affect their vacations each year.

There's a war going on in Ocean City, the results of which will have a direct impact on the vacationer, investor and second-home buyer. It's a war over what kind of community Ocean City will finally become, now that almost all the vacant land is developed and the boom years are past. The resort community has begun to stabilize, but it is searching for solutions to problems -- some new and some old. Development has brought traffic congestion, beach erosion and increased demand for public services. At the same time, parts of downtown are shabby and attract a rough crowd that spoils the family image that Ocean City pridefully projects.

The lines have been drawn between civic associations -- representing the growing community of retirees who live here year round -- and real-estate developers. The civic associations want development severely limited or stopped. Because the vacant land has been largely developed, developers now are looking to tear down a variety of older one- and two-story buildings and replace them with more mid- or high-riseapartments. The opponents of such development paint a verbal picture of concrete canyons on the oceanside with streets even more crowded with cars than they are now. What will be lost, opponents of development say, is whatever charm Ocean City now has. Picture Rosslyn on the ocean, they say, and you have an idea of what Ocean City could be like.

Everyone agrees that Ocean City is desperately in need of a plan, of a clear course of action for economic development, for revitalizing downtown. But the battle over what needs to be done has tied the local government in knots.

"It's a case of greed versus the citizens," said Abe Kreger, president of the Coalition of Ocean City Civic Associations. Ron Goodman, a developer, sees it differently: "The anti-development forces are a group of largely uninformed people who are threatening to bring disaster on the community."

Along the way to becoming a fully developed resort, Ocean City has made some serious mistakes. For one, it allowed building too close to the ocean, making it vulnerable to storms and necessitating a $40-million beach replenishment project to be paid for by federal, state and local governments. It also allowed too much building without proper density considerations or aesthetic guidelines.

The resort's growing anti-development faction believes that if construction is allowed to continue, there will be a dangerous strain on services and a desperate search for additional revenue. Although city officials deny it, opponents of development say that the fresh-water supply, which comes from aquifers below Ocean City, is being threatened by salt water intrusion resulting from over-use.

And this spring the city came close to lining all of its ocean-block streets with parking meters as an alternative to raising taxes. Public opposition forced the city to cancel the parking meters at the last minute. On a typical summer Saturday evening it can take 40 minutes to drive the 10 miles from one end of Coastal Highway to the other. If development continues unchecked, opponents of development say, traffic congestion will worsen to the point of gridlock and the quality of life will deteriorate. "People come here and see all the high-rises, they see all the traffic and they have second thoughts about coming back," said Hank Westfall, president of one of Ocean City's civic associations. Ultimately, development opponents say, if people do stop coming back, the jewel of the mid-Atlantic coast will be left in economic turmoil. Ocean City will become the city that ate itself.

Developers, on the other hand, say the city's economic vitality and quality of life depend on new construction. They say that extensive redevelopment will use land more intensively, increasing the demand for services but increasing tax revenues even more. Taxes will not have to be raised. Continued high-and mid-rise construction is in the city's best interest, they say, for a simple reason: Ocean City's land is so expensive that the only viable low-rise alternative is cheap pre-fabricated buildings that attract lower-income tourists. If restrictions on development continue, developers believe, they will soon have to leave town, and Ocean City, like Atlantic City before it, will begin the slow slide first to deterioration and then to casino gambling.

Although Ocean City has historically been as friendly to developers as any East Coast resort, the anti-development faction has clearly gained the advantage in recent years. In 1984 and 1985, the city waged war over density regulations, with an organized developers' coalition arguing that there should be no density reduction. "Ocean City is what it is and it's too late for you all to change it," said Bob Warfield, one of the resort's leading realtors.

Despite that argument, the anti-development faction won out, and allowable density was reduced roughly 50 percent. This year, the city passed a controversial ordinance allowing buildings up to 14 stories in five of eight zoning districts. It sparked a referendum petition drive among residents, leading to the repeal of the ordinance and passage of another. Now a new petition drive is under way against that ordinance, and many developers worry that enough people in Ocean City are opposed to further construction to make any high-rise ordinance ineffective. They worry that the grassroots anti-development campaign is, in effect, forcing a building moratorium in Ocean City.

"If this anti-development atmosphere continues, it'll ruin the city," said Ed Goldstein, whose proposed 12-story Hilton hotel at 91st Street is the project most immediately affected by the high-rise ordinance. "The builder in Ocean City will not survive because of it."

There is doom in both sides' scenarios of an Ocean City with the other in control. But the emotional nature of their conflict often obscures what the two groups have in common. Both, for instance, say that an architectural review board is necessary in Ocean City and that the resort needs to concentrate in the future on quality rather than quantity -- quality of design, quality of services, quality of community relations. Both agree that Ocean City was allowed to grow willy-nilly in the past and now needs a plan for the future.

Largely because of the battle over development, a once close-knit seaside community has become bitterly divided in recent months, with big businessmen and developers on one side and "the little man" -- often represented by members of a growing retiree population -- on the other. The little man believes it's time to make Ocean City a better place in which to live, not just to vacation. If it needs to increase taxes, tax the tourist first, in the form of a higher room tax, he believes. The businessman points out that Ocean City is not a residential community and never will be; it is a business community first.

Politics is the arena in which their conflict is most visibly waged.

Last fall's City Council race, most agree, was the dirtiest in city history, marred by stolen election signs, smear campaigns and even physical threats. Said losing incumbent Ed Ellis, who had been the top vote-getter in two previous elections but has spoken out against several developers, "I lost in a mudslide . . . . There is a clique of people in town, who are friends with developers, who have a tremendous influence on what happens."

The irony is that as politics has heated up, the Ocean City Council and zoning boards have become increasingly ineffective, unable to make decisions. Sign ordinance legislation, for example, was debated for years and then tabled, as were plans for an historic district downtown and for a parking garage. When the council has followed through and made major decisions, public opposition has several times caused it to reverse itself.

The desperation within the community has come about because there is so much at stake. Zoning decisions made now and in the next two years will determine what kind of resort Ocean City will become, for the resident and vacationer. They will determine whether or not a massive redevelopment will occur with quality mid- and high-rise projects replacing the mish-mash of low-rise buildings; what will be done about transportation and parking, and whether or not there will be a revitalization of downtown.

A few years ago, the city spruced up the area by planting trees, putting in cobbled walks and old-fashioned streetlamps. A shopping village went up at the end of the boardwalk, an entry park near the Route 50 bridge. But there the revitalization stopped, and because of the area's rundown rooming houses and corner bars it remains a magnet for motorcycle gangs and others that makes Ocean City unpleasant for some vacationers.

Downtown is the resort's one real neighborhood, with history and charm, and it could easily be changed from a paint-chipped cluster of houses into a quaint little village with unique amusements -- a Harborplace by the sea. Why hasn't it? Largely because of the conflicting factions in town, some of whom want to see high-rises there, some of whom would like to see it stay exactly as it is.

What it takes is a master plan, one with more definite objectives than the pending comprehensive plan, a plan that creates tax breaks as an incentive for revitalization and sets up a board to be in charge of it.

What it takes is a commitment.

It was Hugh T. Cropper Jr., Ocean City's mayor from 1959 until 1970, who was at the helm when the city made the decision to allow for all-out development.

The decision to grow as city did was consciously made, those who were in office in the 1960s say. But even Cropper is a little irked by the monster he helped create.

"The thing that worries me is if we don't have some pattern, then there will be no way to drive the streets. No question about it, they've got to do something about overcrowding. That's the greatest thing I worry about . . . . It probably sounds bad for me to say, since I'm the one who got it going."

James Lilliefors is editor of the Maryland Coast Dispatch in Ocean City.