The National Commission on Neighborhoods, which had high hopes of influencing federal policy on local communities, now finds itself in deep disarray after weeks of internal bickering.

Bob Kuttner, 33, resigned his $40,000 job as executive director yesterday, in protest over budget cutbacks and the layoff of seven staffers by the commission's executive committee.

Two other senior officials, James [WORD ILLEGIBLE] and William Price, also quit to protest, and two junior staffers have resigned for other reasons, leaving the original 22-member staff with 18 employes.

In addition, the commission, which is due to go out of business at the end of the year, has been unable to persuade Congress to grant it a three-month extension and another $500,000 on top of its $1 million budget.

Sen. William Proxmire (D-Wis.), a member of the commission created by Congress last year, originally favored the extension and the extra money that decided last week to oppose both.

Proxmire could not be reached for comment, but an aide explained that the senator was concerned about "charges and countercharges of waste and mismanagement" between Kuttner and teh commission's chairman, Massachusetts state Sen. Joseph Timilty.

"They're having trouble getting their act together," the aide said of the commission and its staff. "Proxmire didn't want to throw good money after bad and risk getting the Golden Fleece award himself." Each month Proxmire awards fleece prizes to government agencies that he feels are guilty of boondoggling.

Timilty said after a commission meeting yesterday, in which the dispute was discussed in closed sections, that "I had a serious budget crunch and I had to make some immediate, tough decisions."

Kuttner contended that the budget difficulty was not as serious as Timilty said and that the chairman could have made fewer layoffs.Timilty said the commission now has $200,000 left to produce a final report on neigborhoods, "and we'll produce it by the end of the year if I have to write it myself."