Several thousand postal workers and union leaders staged a "no contract, no work" demonstration in front of the U.S. Postal Service yesterday to protest slow progress in bargaining for a new contract.

The existing contract covering 550,000 postal workers expires July 20, and federal mediators have said "little progress" is being made in negotiations. Strikes are illegal, but walkouts have happened before and were being threatened again yesterday.

Waving signs reading, "Jimmy, We Don't Like Your Peanuts," the demonstrators also protested in front of the White House to denounce administration efforts to keep down the costs of a postal settlement.

White House inflation fighters have proposed a lid of 5.5 percent a year in wage increase, while the postal unions are seeking a 14 percent rise in wages and cost-of-living adjustments for the first year of a two-year contract.

The postal talks, along with railroad negotiations that are also under way here, are viewed as a significant test of the administration's program of voluntary wage and price restraint.

The rail unions are considering a wage package that reportedly far exceeds the administration's goal of 30 percent or less in wage increase over three years for the more than 400,000 rail workers.

Yesterday's postal demonstration was called by leaders of New York City postal unions, which were the starting point for a wave of wildcat strikes that idled 200,000 workers for a week during postal negotiations in 1973. The New Yorkers threatened walkouts if a new contract is not reached before next Thursday's deadline.

"If there's no decent contract by midnight July 20, then there's no work," said Moe Biller, chairman of the American Postal Workers Union's Northeast Region, as the demonstrators gathered at the Sylvan Theater for a march to the Postal Service headquarters at L'Enfant Plaza.

Emmet Andrews, president of the 300,000-member APWU, also told the crowd, "I say . . . no contract, no work." But later he downplayed the possibility of a strike in conversations with reporters. Asked if a strike was likely, he said, "What we're trying to do is negotiate a contract."

The crowd, estimated by police at nearly 4,000, appeared divided about striking. Some cheered the "no contract, no work" slogans but others told reporters they didn't want a strike.

In addition to wages, key issues reportedly included the Postal Service's insistence on modification of the existing "no-layoffs" contract clause, working conditions and safety, use of part-time labor and work rules.

Andrews said no arguments have been reached on major points, including wages and job security. He said the Postal Service has not yet put a money offer on the table.

Federal Mediation and Conciliation Service Director Wayne L. Horvitz, who entered the talks last Monday, met separately with both sides yesterday and scheduled joint meetings today. He said the expected negotiations to continue over the weekend.