THE DEPARTMENT of Housing and Urban Development launched its urban-action grant program in a hurry - and is now struggling to adjust its course. The $400-million-a-year program, known as UDAG, offers grants to declining localities that can put together creative public-private redevelopment plans. The law calls for a "reasonable balance" among commercial, industrial and neighborhood (mostly housing) projects. But when HUD handed out the first $150 million this month, 22 of the 50 awards and over two-thirds of the funds went to downtown commerical projects. Thirteen of those involve hotels.

The hotels have caught much of the flak. The real problem, though, is the concentration on hotels and office complexes and parking garages and shopping malls - including one huge project in St. Louis that is intensely controversial there. It's easy to see how that happened. HUD was eager to get going and to show the potential for "leveraging," or using each public dollar to generate several dollars in private investment. Many cities already had downtown plans or dreams involving large private commitments that could be whipped into application form quickly. Some cities - including Tacoma, Wash., Compton, Calif., and Patersn, N.J. - did come up with imaginative housing or industrial projects. Such efforts, though, are often harder to devise and require larger percentages of public funds - though their return in jobs and community stability may be at least as great.

HUD is now trying to improve the balance. Assistant Secretary Robert C. Embry Jr. has just encouraged cities to submit more projects involving neighborhoods or minority or community-based development organizations. Unfortunately, that good advice may be a little late. Half of this year's funds for metropolitan areas have already been handed out; applications for the next $75 million are due by May 1. Moreover, a number of cities have probably taken their cues from HUD's first-round awards - or its field personnel - and are rushing to polish up their own flashy downtown plans.

HUD should more to prevent the kind of downtown/big-business tilt that helped discredit urban renewal. Secretary Patricia R. Harris should make sure that HUD's field offices understand the emphasis on innovation and balance, and that eligible cities, especially smaller ones, get enough information on the kinds of housing and neighborhood initiatives that did win grants this month. Most important, HUD should extend its deadlines. "Action" should not be synonymous with "rush."