Former Treasury Secretary John B. Connally the new boy in the GOP, was giving some old advice to 600 party functionaries at an annual southern states strategy conference here, talking about naysayers and achievers, of Democrats and Republicans.

"How many of you are sick of welfare?" Connaliy drawled, and virtually every hand in the audience shot up in the air.

"All right, but you just lost about 70 per cent of the country," Connally told his visibly startled audience.

His assertion, Connally hastened to add, was not to suggest that welfare benefits should be increased. The casual estimate, he said, merely reflects the number of Americans who believe that the poor, the infirm, the aged and the disabled should be taken care of by a compassionate government.

A few minutes later, Rep. Robin Beard (R-Tenn.) brought the same audience to its feet cheering with the statement: "I'm a right-wing, hardcore, conservative reactionary."

No matter how qualified was Connally's point - or uninhibited Beard's boast - each served to dramatically illustrate a political dilemma for southern Republicans as they approach a crucial congressional election year and plan for the 1980 presidential race.

It is a dilemma that the Republican leaders did not confront directly in the two-day conference, much less resolve.

That is, the seemingly inherent conflict of interest of a party committed to broadening its base to include blacks, young voters and more bluecollar workers, while at the same time sworn to adhere to the fundamental principles of Republicanism and to a party platform written, to a large extent, to conform to the ideology of Ronald Reagan.

Spaker after speaker, including Reagan, paraded to the dais at Disney World's Contemporary Hotel to swear the delegates to the commandments of the party, and to warn the local leaders against compromising timehonored principles of conservatism, or against trying to "be all things to all people."

Just as incessantly, the party's national chairman, Bill Brock, and other leaders dwelled on the urgency of rebuilding the party from the bottom up and enlarging its appeal to cover classes of people who have been traditionarlly excluded.

Without enlisting blacks, for instance, the party is doomed, Brock said repeatedly. The same applies to women, the young voters, and lower economic groups.

Is is clear the Republican Party in the South has almost nowhere to go bu up.

Three years ago Republicans in the 11 states of the Old Confederacy lost 30 per cent of their seats in state legislatures ane 20 per cent in Congress; last year, they lost 8 per cent in the legislatures; in a decade only three Republicans have been elected to any statewide office below that of governor.

Party registration is minuscule in many Southern states, such as South Carolina, with a population of over 2.5 million, where there only 34,00 voters in an exciting party primary contest in which Gov. James B. Edwards beat retired Gen. William C. Westmoreland last year.

A major test of the Party's strength in the South will occur next year when terms end for all five Republican senators - Jesse Helms of North Carolina, Howard H. Baker of Tennessee, John Tower of Texas, Strom Thurmond of South Carolina, and William Scott of Virginia who is retiring.

In interviews here, party leaders from national and state chairmen to town officials expressed unshakable convictions they can bridge the gap between their goal of broadening the party's face and continuing to not offend the region's conservative possibilities.

What emerged from the interviews was a composite of a new Republican voter, as perceived by the party leaders. He or she is younger, most likely 18 to 35, with less than a full college education, probably newly married and in the lower-middle-income bracket with hopes of upward mobility.

Black or white, the voter would feel that President Carter - who wouldn't be in the White House without the South's vote - had betrayed him, and that the middle class is taxed more unfairly than either the higher or lower bracket.

But most of all the leaders said almost unanimously, the prospective new Republican voter will feel he or she has been taken for granted by the Democratic Party.

"For more years than I care to remember, the South has been taken for granted by Democrats. They had the South in their hip pocket, and the Republicans just gave up," Charles Pickering. Mississippi state chairman, said in an interview.

"Well, the people sense that> particularly the working people who don't like being in anyone's hip pocket. They want a job, and a decent standard of living. That's who we have to go after," Pickering said.

The voter targets, he said, include supporters of George C. Wallace and "people who vote for us on the issues, but don't want to be part of the party.

"We're saying we have not done as good a job as we could. The Democrats have done a better job conning the people, and we have not shown our concern with the average working people. We've had the concern, but we just haven't said it to them," Pickering said.

A party offical from North Carolina put it another way privately, "Hell, we haven't even been lying as good as they have."

Clarke Reed, former Missippi chairman whose rebellious delegation seemed pivotal in last year's Republican National Conventional, said he sees opportunities unfolding because of th election of Jimmy Carter.

"There is no more charade about conservative Democrats with the election of that man. That's having a great effect on people of the South," Reed said.

As for black voters, who number 4 million in the South, Reed and other politicians here suggested the Democrats have won Republican Party need not have to sweep the black vote in order to resuscitate itself in the South.

If the party can win 15 or 20 per cent of the black vote in a district, it often will be enough to push the totals high enough to elect candidates, they suggested.

When asked whether Republican ideals wouldn't conflict with those of such blacks who believe in federal health care and the government as employer of last resort, Reed said the party should begin with "a minority of the monority," meaning the working, family-oriented, church-going and, in many ways, conservative black.

Many black voters are middle class or potentially so, he said, and their ideology is not at odds with moderate Republicanism. But he also acknowledged. "There's not much we have to offer the nonworking black or white who doesn't want to work. We've got nothing to communicate about."

Statistics seem to support the thesis of a steadily growing black middle class, even if it is still small. In 1965, 4 per cent of southern blacks has incomes over $15,000, but by 1974 it had grown to 13 per cent, according to the U.S. Census Bureau.

Connally also saw no conflict for the party saying, "Our principles are principles to which everybody can subscrible. We can stand by them and still win elections here.

"Were have to say to the blacks and browns, 'You can't look to us to outpromise the Democrats, but we can be aware of your problems.' I'm talking about opportunities the Democrats have been promising for years and haven't delivered."

Financially, the party is better off than ever. The national committee has raised $2 million of an $11 million goal, of which about $4 million will go to state organizations and local candidates as part of the "grass roots" rebuilding effort Brock has been pushing. The Republican Congressional Campaign Committee reportedly has raised $12 million.

Brock's emphasis on local is based partly on concern about the 1980 census, which will require redistricting by state legislatures across the country for themselves and for the U.S. House of Representatives. In many states, Republicans could lose seats if Democratic legislators are drawing the district lines after the 1980 census.

Brock was cautious in his predictions, saying, "I think we'll make sizable gains, but we may have to run some people a second time."

He said he was encouraged by severa1 elections Nov. 8 in which Republican candidates in the South won with sizable black votes. They include Virginia Attorney General-elect Marshall Coleman, Charlotte, N.C., Mayor-elect Jim Harris and Jefferson County, Kentucky, Fiscal Court Judge Mitch McConnell, each of whom polled about 25 per cent of the black vote. Republicans also gat election [1976] we ran into a pretty sharp bump on our growth curve. The last four years have been difficult, nationally, but since the last election, there are signs we're starting to recover. Ultimately, I see a prospect of a re-emergence of the two-party system in the South," Brock said in an interview.

Repeatedly, in several discussions, the chairmen stressed the Sun Belt's economic explosion, and its potential impact on a party that perceices itself as flourishing ineconomic growth areas.

"When we talk about tax cuts, we talk about creating jobs. When we talk about energy, we talk about creating more economic growth. We want to be associated with the growth of the South, and now more than ever the South needs a two-party choice," Brock said.

"People here are realizing they can"t be owned by one party, because if they are, neither party will pay attention to them. That's going to be our salvation, and that's the message we are going to take to the people the South," he said.