The Southeast Asia Treaty Organization, begun 23 years ago as part of a U.S. policy to contain communism, is about to fade into oblivion.

Thursday the flags of member nations will be lowered for the last time outside the drab gray SEATO secretriat building here, formally signaling the demise of the brainchild of the late Secretary of State John Foster Dulles.

But SEATO has been dying for years.

Some diplomatic observers believe that the end began when the United States made its first overtures to China. Then the Communist victories in Indochina ended all doubts.

The formal end to SEATO was sought by Philippines President Ferdinand Marcos and former Thai Prime Minister Kukrit Pramoj in July 1975. Citing the "new realities of the region," meaning the Communist victories in neighboring Indochina, they called for SEATO's dissolution and set about establishing diplomatic relations with China.

Even before that, two disenchanted member states - France and Pakistan - dropped out, although Paris never abrogated the Southeast Asian Collective Defense Treaty, which gave rise to SEATO Sept. 8, 1954. This left only the United States, Britain, Australia, New Zealand, the Philippines and Thailand as active participants.

While SEATO's days are over, the collective defense treaty, more commonly known as the Manila Pact, remains in force. Although the Carter administration has not publicly committed itself to honoring the pact, the United States and the other signatories are still considered obligated to come to the aid of the Philippines or Thailand in the event of external aggression.

Deputy Assistant Secretary of State Robert B. Oakley told a news conference here last month that while "the United States does stand by its old commitments . . . the Carter administration, I'm sure, would make it own judgment depending upon the specific circumstances."

Outgoing SEATO Secretary General Sunthorn Hongladarom was more positive and more specific. "All U.S. governments to date have declared that they would respond to their obligations under the Manila Pact," Sunthorn said in an interview. He added, "That includes the present administration. President Carter has made clear that the United States will remain a power in the Pacific."

In addition to the collective obligations of the pact, the United States is further bound to assist Thailand under the so-called "Thanat-Rusk communique."

In March 1962, former Secretary of State Dean Rusk and former Thia Foreign Minister Thanat Khoman issued a statement committing the United States to intervene in any armed attack on Thailand, with congressional approval but without "the prior agreement of all other parties to the treaty." Ironically, in October Thanat told foreign journalists in Bangkok that SEATO had become a dinosaur."

According to Sunthorn, the United States is committed "collectively and bilaterally."

Prime Minister Thanin Kraivichien, an arch anti-communist, made quiet inquiries soon after coming to office in October about the possibility of SEATO being revived, "but," a SEATO source said, "it was too late."

SEATO had never lived up to its billing as a bulwark against communism in Asia. One reason was that some of the key non-Communist countries in the area - notably India, Indonesia, Sri Lanka and Burma - did not join.

Perceived by Dulles primarily as a military alliance, SEATO forces ran scores of costly military exercises. They were alerted only once, during a crisis in Laos in 1962, but never went into action.

Sunthorn, a genial, soft-spoken former diplomat who was once Thailand's ambassador to the United States and Britain, claimed that this indicated SEATO's effectiveness.

"SEATO had three major achievements," he said. "It provided a deterent against massive Communist aggression against Thailand and the Philippines. It has provided Thailand with intelligence information on how to counter subversion. And it has bought time for Thailand and the Philippines to strengthen themselves."

In time, SEATO all but ceased being a military alliance and gradually became almost entirely a socio-economic organization. In 1973-74, for example, the United States' contribution to the SEATO budget was $1.4 million for civil activities and only $252,000 for military functions. The normal U.S. share was a quarter of the yearly budget.

A number of the civilian activities have been taken over by individual members.For example, the United States and Thailand are now running the former SEATO medical laboratory, specializing in tropical diseases, here in Bangkok.

Sunthorn, who has taken a job with the Thai Red Cross, said that he does not believe that the idea of dissolving SEATO would achieve its "apparently desired effect" of appeasing the Indo-chinese communist regimes.

"Up until now," he said, "Thailand's overtures to Vietnam have come to nothing. And their support for subversive elements in this country has actually increased."