A new British political initiative in Northern Ireland, aimed at giving both Protestants and Catholics there more say in local affairs, is threatened by opposition from Protestant leaders.

Prime Minister Margaret Thatcher's Northern Ireland secretary, Humphrey Atkins, announced this week that he would convene a conference of Ulster political leaders to consider a variety of British proposals now being drawn up for limited home rule there.

These proposals would transfer to some form of locally elected government in Northern Ireland any of a wide range of responsibilities -- such as housing, economic development or education -- now exercised by Britain in its direct rule of the strife-torn province. The proposals would include "reasonable and appropriate arrangements to take account of the interest" of the Catholic minority, Atkins told Parliament.

Atkins told a group of American reporters yesterday that it would be up to Protestant and Catholic political leaders at the conference to choose the powers to be transferred, the form of locally elected government and the way power would be exercised by Protestants and Catholics. Agreements reached at the conference would be considered in the drafting of a final plan to be put before Parliament here for its approval.

Atkins intended to hold the conference of leaders of the rival Protestant parties (the official Unionists and the Democratic Unionist), the Catholic Social Democratic and Labor Party and nonsectarian Alliance Party within the next month, reach "the highest level of agreement possible" by the end of the year and present a plan to Parliament early next year.

But leaders of both Protestant unionist parties who favor keeping a Protestant-controlled Ulster inside Britain, have refused to attend.

Official Unionist leader James Molyneaux said his party would "never engage in time-wasting exercises and window-dressing of this type," although it would seriously consider any local government proposals for Ulster introduced in Parliament.

Rival Democratic Unionist leader the Rev. Ian Paisley, a popular politician in Northern Ireland, said he would not attend a conference on political changes until new and tough measures were taken by the British on security in Ulster.

Gerry Fitt, the leader of the Catholic Democratic and Labor Party which favors eventual unification of Ulster with neighboring Ireland, said "the minority population are very suspicious" about new powers for local governments in Ulster that might wind up solely in the hands of the Protestant majority -- which outnumber Catholics 2 to 1 -- as was the case before direct British rule.

Atkins said yesterday he still expected to persuade the Protestant and Catholic leaders to attend the conference after they have seen the proposals and met with Atkins privately to discuss them.

He said security would remain under British control and British troops would remain in Ulster. The possibility of withdrawing the British troops "terrifies me," Atkin said. "There would be the most horrifying civil war" involving both Ulster and the Republic of Ireland.