The water supply for more than a million people and hundreds of businesses in suburban Maryland was drastically reduced yesterday when a major pumping station on the Potomac River in Montgomery County was crippled by a small electric fire.

Officials of the Washington Suburban Sanitary Commission, which supplies water for Montgomery, Prince Georges and part of Howard counites, warned yesterday afternoon that the water supply for Montgomery and Prince George's would be at a critically low level until at least Friday morning.

Although most residents of Montgomery and Prince George's noticed little difference in the flow of water from their taps by late yesterday afternoon, WSSC officials warned that unless water is carefully conserved, the dwindling supply left in scattered water storage tanks might run out before the crisis ends.

To conserve water, employers in the affected area sent thousands of workers home early yesterday. Swimming pools were shut down abruptly on what became the hottest day of the year, and public officials voiced fears that fires might hit while there was little water left to fight them.

The county executives in both Montgomery and Prince George's also put emergency water supply plans into effect, advising residents to conserve water in any way possible even if it meant using water only for drinking and for emergencies.

Even where there is no total loss of water, WSSC officials warn that pressure drops are possible, generating in turn the remote possibility of backflow contamination can occur if suction, caused by low pressure, pulls ground water into the water pipes.

WSSC officials recommend that customers in areas with low pressure boil water briskly for five minutes to assure it will be safe to drink.

The District and suburban Virginia were not immediately affected by the Maryland water shortage.

The Maryland crisis occurred at a time when the drinking water supply for the entire Washington area was already undependable, with the Potomac River reduced to a third of its flow by the near-drought conditions of the last few months.

Throughout the day yesterday, a team of WSSC engineers struggled to repair the huge, complex control panel which controls the pump and the two burned-out transformers which supply electrical power to the plant.

The damaged Potomac water treatment plant pulls in, clarifies and normally distributes 170 million gallons of Potomac River daily during peak periods. That figure represents about 75 per cent of all the drinking water supplies for the two suburban Maryland counties.

The remaining water, usually about 50 million gallons a day, is supplied by the Patuxent Water Treatment plant, which was pushed to operate at 70 mgd rate yesterday to help cope with the emergency.

But "that can't go on," WSSC general manager Robert S. McGarry said, adding that the Patuxent pumping station is drawing down its reserves.

"It's a very very serious situation that could be prolonged beyond 43 hours; it's an emergency situation in both counties," Montgomery County Executive James P. Gleason said at a hastily-called press conference at WSSC headquarters yesterday.

About 160 million gallons of water were already stored in 50 holding tanks around the two counties when the Potomac plant shut down shortly after 7 a.m. yesterday - the equivalent of about a day's supply for the affected area.

By 6:10 yesterday evening, one home in Gaithersburg had run out of water. "They said it would be out at 6 and at 6:10 the faucet just went drip, drip, drip and that was it," said 19-year-old Joseph Richards of 7671 Laytonia Dr.

At least 12 tank trucks carrying water were stationed around Montgomery County yesterday to give residents a backup supply if their taps went dry.

Gaithersburg and the central and eastern portions of the county, from Bethesda to Wheaton to Olney, were expected to be the first areas to feel the effects of the shortage, since they sit on higer ground than surrounding areas and water must be pumped up to them.

Prince George's County, almost all of which is more low-lying than its western neighbor, is therefore likely to feel effects of the shortage later than Montgomery..

Nonetheless, major institutions in both countries, like the University of Maryland, closed down in the early afternoon yesterday. About 3,000 of the university's 5000 employees were sent home and water fountains were shut off, according to Randy Blunk of the University Relations Office.

In Bethesda, the National Institutes of Health, largest water user in the two-county area, turned off air conditioning in administrative offices, and curtailed laundry services, thus saving an estimated 3,200 gallons a minute, according to plant engineer Stan Oliver.

Supermarkets around the area were running out of supplies of bottled water and selling unusual amounts of soft drinks. And Dave Van Sothen of the Metropolitan Washington Board of Trade reported that major department stores in the area, such as Bloomingdales, Hecht Co and Woodward and Lothrop, were switching to paper plates in restaurants and turning off all water fountains.

"I found out about [the shortage] when they kicked me out of the swimming pool in Montgomery Village," said Bill Ireland, and employee at the shut-down American gas station car wash on South Fredericks Avenue in Gaithersburg.

"The pool manager said, 'Everybody out of the pool. There's a real water shortage,' and all the kids gathered around and tried to understand what was going on. I don't think the little kids understood.

"Then we went to the Big Boy for lunch and they wouldn't bring out any water unless you asked for it," Ireland added.

The crisis started at 6:59 yesterday morning, when senior plant engineer Tommy Campbell started one of the water pumps that takes purifiws water out of the station's holding tanks and pumps it into pipes that feed the two counties.

"It seemed like it was dragging," Campbell later told chief plant engineer Ernest W. Bond. "It was going er-er-er." Then Campbell saw smoke coming from the pump.

He hit an emergency stop button, but nothing happened. "It had obviously burnt out - it just wasn't working." Bond said. By the time Pepco was alerted and turned off electricity for the entire system, smoke was also coming from the control panel.

The fire was out by 7:20, but the damage was done: two of the plants four transformers were damaged, as were the main oil circuit breakers, through which the power pumps.

In addition, half the control board, which is 90 feet long and 8 feet high, was damaged by the fire. WSSC workmen yesterday were attempting to divert electricity into the unharmed half of the massive control control panel.

"People should stop using water," Prince George's County Executive Winfield P.Kelly Jr. said yesterday's press conference . "In 48 hours, hopefully, it should come back."

Kelly added, "First is our major concern." He emphasized that people should not hoard water - "not even drinking water."

Sixty Maryland National Guardsmen drove 20 small combat-type water trailers to various points in the stricken area. Use of the Guard was authorized by acting Maryland Gov. Blair Lee.

Maryland was able to receive a small amount of water, perhaps as much as 5 million gallons, from the District, according to the WSSC. But officials said pipes between Maryland and the District were not designed to provide large alternative water supplies.

Last month, the board of the Metropolitna Council of Governments approved a technical study calling for more effective management of existing reservoirs and connection of existing water systems here to stave off future water shortages.

People throughout suburban Maryland generally responded well to the crisis by cutting back on water usage, although there was some minor hoarding, which officials warned could be disastrous on a wide scale.

"I filled up the tub with water in case we all have to take a community bath," said Beverley Selwood of Bethesda. "Then I'm going to fill up a two-gallon thermos with water."

"I skipped my shower after the pool," said Andrea Grossman of Bethesda, "and shower after the pool," my son won't get his bath tonight."

Karl Ackerman was painting a woman's house in Bethesda when he heard of the water crisis. He said it would make it a bit difficult for him to clean up after work because the water was beginning to slow down in the taps of the house.

A spot check of homes in northern Prince George's County in late afternoon indicated residents of that area were not experiencing the water shortage.

In northern Montgomery, when water trucks showed up at Gaithersburgh High School yesterday evening, only three people howed up with containers to get water during the first hours. They were warned to boil the water for five minutes because of possible rust in the tanks. The situation was similar at Northwood High School in Silver Spring, where only four people had come for water from the big water trucks by 6 p.m.

A network of ham radio operators called the Radio Amateur Civic Emergency Service was preparing to coordinate water truck services in Montgomery County.

"I think it's exciting, life is so boring," said Susan Grossman of Gaithersburg, who was shopping in a supermarket. She loaded her carts with paper plates and cups and frozen TV dinners to save dishwater.

Another woman in the supermarket said she wasn't concerned about water problems. "I'm on a well," she said.

Ruth Doyle said she started the day by planning to go swimming and get her hair done, "but they closed the pool and my hairdresser closed down because he turned off the air conditioning so I wound up visiting a neighbor."

"What can you do, it's an act of God," said Muriel Anderson of Gaithersburg, who was shopping in a supermarket.

"An act of God?" said another lady. Eileen Morgan, who was also shopping. "It's bad planning, that's what it is. One station has all that water. There's no fail-safe system. Once more the consumer is at the bottom of the totem pole."

By 3 p.m. yesterday, the supermarkets and drugstores at the Montgomery Village Mail in Gaithersburg had sold out of bottled water and customers were leaving with more than the usual number of soft drinks.

Half of the Gaithersburg City Hall shut down when air conditioning was turned off. At its Department of Public Works, there was concern that several thousand dollars worth of newly laid sod at a community center would die for lack of water.

By 2.30 p.m. water pressure at the Gaithersburg Washington Grove Fire Dept. had fallen to 35 pounds per square inch, about half normal. Firemen said they could fight fires until the pressure dropped below 10 psi. After they they said they would have to rely on pumping trucks brought in from other areas.

Several apartment complexed along Georgia Avenue in Silver Spring took conservation measures. Maria Baker, manager of the 213-unit Fenwick House, said management posted notices asking tenants not to use the laundry rooms and to refrain from taking showers and flushing toilets.

Management at the 858-unit Georgian Towers locked the 29 laundry rooms and closed the swimming pool. The air conditioning was switched to the lowest cycle even though the system uses little water, the manager, who asked not to be named, said. "Right now fire is my biggest fear," she said.

Others didn't seem to be affected, or did'nt care.

"Who cares?" said one homeowner when a reporter asked about the water shortage.

Dale Maze the manager of Louis, a hairdressing salon in a small shopping center in the area, said her employees were not taking any actions to save water. "We only use what we have to anyway," she said. "We haven't been affected yet."

A 20-year-old Capitol Heights man had just begun spraying water over his 1976 Chevrolet Monte Carlo when he responded to a reporter's question about the impending water shortage by saying, "I heard about it, but my car needs washing and I'm going o.ut with my lady tonight."

Another car washer. 24-year-old John Johnson, said he didn't believe the problem was as serious as officials said. "They tell us there is a gas shortage but people are still using a lot of gas and when there was a beef shortage we never had a problem getting beef," he said as he sprayed a fine mist of water over his car.

Gaithersburg police reported a half-dozen calls from citizens complaining about neighbors filling swimming pools or squirting children with water or sprinkling lawns in the 100-degree heat. Police said they contacted these people and asked them to stop.

Also contributing to this story were Washington Post Staff Writers Ron Shaffer, Vernon C.Thompson, Carla Hall, Edwardo Cve, Sandra G.Boodman, Janis Johnson, Mark Sableman, Michael Weisskopf, Christy Hudgins, Judith Valente and Charles Shepherd.