Maryland wants it, New Jersey wants it, Illinois wants it, Colorado wants it and California wants it -- even though "it" will be 300 miles above everybody's head.

"It" is the Large Space Telescope, five tons of optics costing $500 million to be carried away from Earth by the space shuttle in 1983 and left in orbit to peer at the stars for the nest 30 years.

None of the five states actually would get the telescope, which is to be the exclusive property of the National Aeronautics and Space Administration. What they're competing for is the Space Telescope Science Institute, which will direct the use of this unique orbiting observatory.

"Wherever the telescope institute is located will be the astronomical capital of the world for the next 30 years," said one astronomer, who asked not to be identified. "This is the biggest astronomical prize to come along since the 200-inch [telescope] was built at Palomar for the Hale Observatory."

Competing for the institute are at least five astronomical consortia promoting at least five sites, including John Hopkins University, Princeton University, Febmilab outside Chicago, the University of Colorado and the University of California at San Diego. Occasional contenders are said to include the University of Arizona and the University of New Mexico, where numerous ground-based telescopes already are located.

The stakes in the competition hardly seem so astronomical: a building worth about $5 million, housing no more than $4 million worth of computers; a staff of 150, three dozen of them astronomers, spending no more than $10 million a year. But small as it sounds, the institute will be the focus of most of the frontier work in astronomy for years to come.

"It will be the Mount Palomar of the next 30 years," one astronomer describes it. "No question."

The Large Space Telescope "it has no other name yet) will have a lens 95 inches wide, less than half the size of Palomar's. But placed beyond the atmosphere, the 65-inch orbiting eye will be able to see 10 times farther into the heavens and 1,000 times more of the sky that Palomar does.

It will spot stars, the individual stars inside star clusters and nebulae, the remnants of dead and destroyed stars, possibly even planets circling other stars.

"It will unlock the heavens the way the microscope unlocked the cell." said Dr. Arthur D. Code of the University of Wisconsin. "The difference is, this will be on a far grander scale."

So serious is the competition for the institute that three of the competing organizations are made up of no fewer than 74 universities. One (the University Research Association, or URA) is composed of 53 universities, another (Associated Universities Inc., or AUI) of seven and the third (Association for Universities for Research in Astronomy, or AURA) of 14 universities.

URA wants the institute in Fermilab, 60 miles outside of Chicago. AUI wants it at Princeton and AURA at Johns Hopkins in Baltimore. Oddly, Princeton is a member of AURA and Johns Hopkins is a member of AUI. Serious students of the competition think that the choice is between Princeton and Hopkins.

Princeton's argument is that it is a hotbed of astronomical ideas, where Einstein worked for more than 20 years. Hopkins points out that is has been involved in spaceborne astronomy for 20 years, is close to places like Princeton and even closer to places like Washington and the Goddard Space Flight Center, where the Large Space Telescope will be tracked and controlled.

"It will be cheaper to run dedicated land lines from Hopkins to Goddard," said Dr. Arthur F. Davidsen of Johns Hopkins, who has an experiment aboard the Large Space Telescope."It's also cheaper to live in Baltimore than it is in Princeton, at least today it is."

The two states where much of the nation's astronomy is done seem left out of the competition. The California Institute of Technology, the University of California at Berkeley and Harvard University are all members of AURA, which is backing Johns Hopkins as the site for the institute.

In a matter of weeks, NASA will send out requests for proposals, the bureaucratic way of starting the bidding. Nasa says it will not make a decision for a year and then only on the recommendation of a specially appointed source evaluation board.

Politics already is at work. Members of Congress and senators from the five competing states are lobbying hard at the space agency, which is so sensitive about the issue that nobody at the agency connected with the project will talk about the competition. Said astrophysics director Frank Martin: "I'm not allowed to say anything about it."

Whatever state gets the institute gets an astronomical winner whose "faculty" of more than 30 astronomers will decide which stars get observed and which don't and which of their peers get time on the telescope.