The Supreme Court yesterday struck down the federal health standard for worker exposure to benzene, and in the process seriously damaged the government's campaign to control thousands of other cancer-causing chemicals.

The court's 5-to-4 ruling nullifies the basic strategy adopted by the Labor Department's Occupational Safety and Health Administration for regulating known or suspected carcinogens.

But the emotionally charged case sharply divided the court. Justice John Paul Stevens wrote the court's opinion, which three other justices signed, but there were also three separate concurring opinions, and the ultimate impact on OSHA's cancer regulation is not clear.

Spokesmen for chemical manufacturers and other industrial groups, which produce more than 11 million pounds of benzene annually, hailed the decision as one of the most important regulatory victories ever for business. Benzene is a widely used industrial solvent, and a raw material used in the manufacture of paints, plastics and hundreds of other products. It is also a byproduct of steel-making.

Government regulators were less certain of the ruling's impact.

In a brief public statement, OSHA said yesterday it could live with the ruling.

". . . We intend to press forward in regulating benzene as well as in regulating other cancer-causing and toxic substances," said Deputy Assistant Secretary of Labor Basil Whiting. Although the decision makes the agency's job "more difficult," Whiting concluded, "it is still a task which can and must be accomplished."

But Steven D. Jellinek, the environmental Protection Agency's assistant administrator for pesticides and toxic substances, said the ruling could undermine all efforts to regulate carcinogens.

The court may have set "an impossible standard to meet," he said. "By the time the proof arrives in the form of dead bodies, it will be too late."

At the least, added Jellinek, yesterday's decision will delay for years the effort to impose new limits on benzene exposure, since the new evidence that is assembled also will probably be challenged in court.

Justice Stevens insisted that the court's ruling will not strip OSHA of its ability to regulate cancer-causing chemicals, "nor will it require the agency to wait for deaths to occur before taking any action."

The court's insistence that OSHA show that workers face "significant" risks from suspect chemicals is not "a mathematical straitjacket," Stevens wrote.

The court suggested that OSHA can use the results of animal testing to back up its ruling, where health records of workers do not provide sufficient evidence for decisions. But how heavily the court will weigh such testing data was not made clear.

The decision clearly imposes a heavier burden of proof of OSHA to show that toxic chemicals pose "significant" risks to workers before the agency can impose strict exposure limits.

In regulating benzene and other cancer agents, OSHA's policy has been to assume that no safe level of exposure exists. Relatively high levels of benzene exposure have caused leukemia among workers, when benzene is inhaled and absorbed in the blood.

Because scientists cannot determine a safe exposure level, workplace exposures must be reduced to the lowest levels permitted by available technology and plant modifications, without forcing a wholesale closedown of chemical and petroleum plants, OSHA said.

In 1977, it ordered the existing exposure level in the workplace reduced from 10 parts per million of air to 1 part per million.

An estimated 30,000 workers are exposed to benzene at levels of 10 parts per million or more.

Ruling on a suit by the American Petroleum Institute, the 5th U.S. Circuit Court of Appeals in New Orleans struck down that OSHA standard, holding that it was unreasonable because of a lack of evidence of significant health benefits. The Supreme Court's ruling yesterday upheld the 5th Circuit opinion.

The case, Industrial Union Department vs. American Petroleum Institute, a bitter legal dispute between labor and business, had raised questions of how much it could cost to protect individual workers from the risk of cancer. The estimates ranged from $38,675 for a petrochemical worker to $82,000 per employe in the petroleum refining industry.

The court, however, did not rule on whether OSHA must balance the costs of its regulations against the expected health benefits, since it held that OSHA's benzene standard was not supported by reasonable evidence.

Justice Lewis Powell, in a separate concurring opinion, was the only member of the court to argue that OSHA should weigh the expense of the stricter safety standard against the health benefits expected to result. Justice William Rehnquist, in his own concurring opinion, said Congress had "improperly delegated" that responsibility to the secretary of labor, who oversees the OSHA.

"Thousands of toxic substances present risks that fairly could be characterized as 'significant,'" Powell added. "Even if OSHA succeeded in selecting the gravest risks for earliest regulation, a standard-setting process that ignored economic considerations would result in a serious misallocation of resources . . ."

Rehnquist complained that the 1970 Occupatonal Safety and Health Act gave the OSHA administrator "absolutely no indication where on the continuum of relative safety he should draw his line."

"The decision whether the law of diminishing returns should have any place in the regulation of toxic substances is quintessentially one of legislative policy."

In a strongly worded dissent, Justice Thurgood Marshall, joined by three other members of the court, called Steven's portrayal of the record in the case "both extraordinarily arrogant and extraordinarily unfair" -- arrogant for reaching "its own factual findings" on disputed issues, unfair for saying that OSHA had not compiled substantial evidence of benzene's link to cancer.

"Frequently no causal link can be established between the regulated substance and the harm to be averted," Marshall wrote. "Risks of harm are often uncertain, but inaction has considerable costs of its own."

"You can be sure that the corks are popping on champagne bottles all over the country in the industry," said the EPA's Jellinek.

American Petroleum Institute President Charles J. DiBona said the court's "landmark decision recognizes that health regulations in this country must be made on the basis of scientific facts rather than pure speculation."

Edmund B. Frost, general counsel of the Chemical Manufacturers' Association, said the ruling "will require a reasoned consideration and weighing of the public's interest."

"Congress did not mandate -- nor can OSHA achieve -- a perfectly risk-free society. OSHA can now regulate only significant, not theoretical, risks."