FOR 17 YEARS the federal government has been providing grants to the states for family planning programs. None of this money can be used for abortions, but for a while some states tried to impose a tougher restriction by withholding money from any family planning program that used its own, nongovernmental funds for abortion. A year ago, the Supreme Court, in a case involving an Arizona statute, affirmed the state's right to control the use of public money, but held that private organizations could use their own money for any legal purpose without fear of penalty.

The controversy that has been settled domestically, however, persists in international programs funded by the U.S. government. Although no law requires it, the Agency for International Development has imposed a policy on AID contractors similar to the one that had been adopted in Arizona. In accordance with the "Mexico City policy" -- it was announced at an international conference there -- no U.S. foreign aid funds may go to family planning groups that use non-U.S. funds for abortion-related activities.

The International Planned Parenthood Federation, which had been receiving $17 million a year from AID, lost its grant in 1985. And now its American affiliate, Planned Parenthood Federation of America, whose five-year contract with AID will expire next month, is scheduled to be cut off as well. PPFA is AID's largest grant recipient in the family planning field. It operates more than 100 family planning and maternal and child health programs in 36 countries. None of the money is used for abortion services of any kind, but because PPFA works with indigenous health and family planning groups in many countries where abortion is legal, it cannot guarantee that ultimate subcontractors will not use their own money for these services. Planned Parenthood has challenged the Mexico City policy in court, but litigation is in the early stages, and there is little chance that significant progress will be made by Dec. 31.

What happens if PPFA is dropped from the foreign aid program? AID asserts that its grant money will simply be reprogrammed for population work by other organizations. Even if that happens, though, this important work will be disrupted. Trained and experienced personnel will be lost. A study done at the University of Michigan School of Public Health estimates that it will take about three years for all the services now provided through PPFA to be replaced. During that time, researchers estimate, there will be 311,000 additional births, 1,177 more maternal deaths and 69,000 additional induced abortions. The Mexico City policy is shortsighted, counterproductive and heartless. If AID doesn't reverse it, Congress shoul