The battle lines in the Great War of the Urban Crisis have been drawn.

First came the pre-emptive strike. The journalist T.D. Allman, writing in Harper's Magazine last December, single-handedly conquered the crisis by declaring that it does not exist.

Now comes the massive retaliation. The U.S. government has fired off a 44-page cannonade of arguments charging that Allman's article "presents a misleading, often inaccurate and inconsistent portrait of America's urban problems and the status of its larger distressed cities."

What provoked the feds into this unusual and harsh retort was a series of allegations by Allman, who also directs urban research for a San Francisco-based study group called the Third Century America Project. His article asserts:

"Instead of being 'black, brown and broke,' cities are attracting affluent people from all over the world, and in some fortunate cases at last, finding themselves with more revenues than they know how to spend."

"Since the beginning of the year [1978], the whole tenor of urban discourse has changed, with visions of inner-city renaissance prevailing over the old prophecies of doom."

City populations may be declining, but the per capita wealth of those people remaining seems bound to increase.

Federal funds to city coffers have become "a deluge, so that urban analysts who once feared that cities would expire for lack of outside money now fear that cities might become sick with surfeit."

Cities are generating new jobs as fast as or faster than many suburbs.

"The suburbs themselves are falling prey to social problems once confined within city limits."

Allman took pains to say he was not suggesting that all city problems had been solved, but he made it clear he thinks that federal funds and policies are largely irrelevant to the problems.

Obviously, that infuriated some people at the Department of Housing and Urban Development, which administers a lot of those funds and policies.

Allman's thesis that cities are well off has gained a certain currency, and urban "renaissance" themes have appeared in a James J. Kilpatrick column, a Newsweek article and a New York Times Magazine report.

Moreover, the thesis seems to be accepted in many quarters in the Office of Management and Budget and on Capitol Hill.

Robert C. Embry Jr., HUD assistant secretary for community development, is especially disturbed. "I called in some staff members and said, 'Look, this is becoming conventional wisdom -- that the cities are no longer suffering.' I thought there were a lot of misconceptions in Allman's piece, and I asked the staff to tell me if his conclusions were true. So we got out a working paper for our own use and for those who care about the subject."

As it does with many of its working papers, HUD sent out some 300 anti-Allman pieces to university professors, other academics, media, interest groups and congressional aides.

The paper was written by a team headed by Marshall Kaplan, deputy assistant secretary at HUD for urban policy. His paper asserts:

"Between 1975 and 1977, 1,018,000 more families moved from central cities to suburbs than moved into central cities from suburbs."

"The average income of families moving out of cities was $16,000 compared to $15,000 for those coming into cities (1975-1977). Because of net outmigration and the lower income of inmigrants, central cities lost over $17 billion in family income from 1975 to 1977. Furthermore, the poverty rate in cities was higher in 1977 than in 1969."

"While neighborhood reinvestment has occurred in some cities, the phenomena is neither recent nor pervasive. Further, although displacement of the poor and disadvantaged resulting from reinvestment and neighborhood revitalization is visible and of concern, the numbers involved are still relatively small.... Clearly, Allman's assertion that 'the newly arrived rich are pushing the poor out' is a gross overstatement."

Intead of receiving $80 billion a year from the federal government, as Allman contends, cities. are getting $25 billion to $28 billion, around 6 percent of the federal budget.

Central cities still have more housing and neighborhood problems -- substandard dwellings, insufficient heat, abandoned buildings -- than suburbs.

The employment disparity between cities and their suburbs remains significant and may be increasing; that is, suburbs may still be creating jobs faster.

So what should we make of these two tales of the cities?

Should we dismiss Allman's study as nothing more than a trendy exegesis of Richard Nixon's 1973 claims that "city governments are no longer on the verge of financial catastrophe" and "the hour of crisis has passed"?

Should we dismiss HUD's report because, after all, the agency has a vested interest in an urban crisis (the worse things are, the more Congress will dole out for HUD programs)?

We should do neither, at least not for those reasons.

Allman has indeed refocused attention on a subject that had begun to bore everyone, including members of Congress who rejected major. parts of President Carter's urban program last year and taxpayers who have shown more concern about inflation than urban fiscal woes.

Furthermore, Allman is right (though his figures are wrong) when he says federal grants to cities are at an all-time high, but I do not know of any analyst who thinks, as he claims, that cities "might become sick with surfeit." He is also right in saying some cities are doing better than they were -- a point Kaplan's paper readily admits.

But Allman is fundamentally wrong in the general impression he creates, that cities on the whole are well off and no longer in need of much of the federal aid they have been getting.

Urbanologist Richard P. Nathan of the Brookings Institution points out that cities like Boston, Chicago and Baltimore "seem to be turning around, and federal grants have been a tremendous factor."

Yet he and others have found that the most depressed cities -- such as Cleveland, Detroit, St. Louis, Newark, Buffalo, Camden -- are relatively worse off fiscally than they were before the recession of the mid-1970s. "And if we have another recession, I worry a lot about them," Nathan says.

Federal money has clearly kept these and other cities afloat. Now it is being cut back, and many communities are simply dropping services or increasing fees for those they keep.

It is easy to look around and marvel at the frenetic revival of some neighborhoods in some cities, but such activity does not automatically help those cities in fiscal terms. As Philip M. Dearborn, vice president of the Center for Municipal and Metropolitan Research, explains: "It takes a long time for the increased economic activity of a city to translate into tax revenues."

Kaplan's paper take note of the resilience of many American cities but concludes that "the basic issues which generated the president's urban policy still exist."

Allman is offended that the government "spent God knows how many thousands of dollars to rebut me."

But I think the money was well spent. The two documents certainly frame the argument, and HUD's is a respectable compilation of the latest data about the urban condition.

Allman's, unfortunately, is not. For instance, in a long section purporting to show that cities are outpacing suburbs in creating new jobs, he states:

"In fact, since 1975, as the employment statistics for cities like St. Louis and Cleveland show, cities have accelerated the rate at which they have generated new jobs."

I was in Cleveland several times last year, and that was not what I was hearing from the people there. Recently, I checked with the Bureau of Labor Statistics. Its figures show that between 1970 and 1974, 52,000 new jobs were started in Cleveland's metropolitan area, 40,000 of them in the city itself. Between 1974 and 1977, 30,000 new jobs were created in the area, none of them in the city. In fact, in that time jobs in the city decreased by about 10,000.

Such sloppiness, which is replete in the Allman piece, has had at least one positive effect. It angered and thus mobilized HUD into giving us an update on urban America.

While the update contains some self-serving plugs for Carter's urban program, it is not the doomsaying, "silly paper" Allman says it is. Rather, it is a concise, balanced report that -- unlike Allman's article -- recognizes that America's cities are not a monolith. It deserves to be widely read.