Twenty years ago, Boston's downtown meat and produce marketplace at Faneuil Hall was a shopping area almost without shops. Signs warned firefighters about a possible building collapse.

At the same time, the shopping area called Grove Hall was lined with small businesses like pharmacies and dry cleaners and formed a bustling main street for one of the many urban villages that comprise this city.

Today the relative positions of Faneuil Hall and Grove Hall have been reversed. The former has become a national symbol of Boston's downtown retail revival. But Grove Hall -- named for a colonial era mansion long since demolished -- has become an urban ghost town. A classic combination of racial change, rioting and population shifts to the suburbs has left whole blocks of the main street of this Dorchester neighborhood vacant. A bank has become a storefront church. An auto showroom has become a legal aid office.

Such dilapidated urban Main Streets, common to most older northeastern cities, have long been viewed as a sympton rather than a cause of neighborhood decline. Government aid programs in such areas have generally focused on improved housing.

A new program being undertaken here and in many East Coast cities, however, is based on the premise that commercial decline produces urban decay and that scarce government funds should go to improve business districts. d

Boston is investing $6 million -- one fifth of its available neighborhood development funds -- in upgrading nine neighborhood shopping areas, and its ambitious program reflects a growning consensus among planners that spending money on economic development is the single most promising new way to stabilize and improve troubled city neighborhoods.

Boston's plan has raised a storm of controversy. It was held up for two months in the Boston city council while city council members backed by low-income advocacy groups, demanded that traditional "human services" programs not to be cut to finance businesses.

"I'm just uncomfortable with the idea of the business community being subsidized by federal aid that's supposed to go to the poor," says Boston Council Raymond Flynn, whose own neighborhood shopping district in South Boston is one of those targeted for aid.

"I just can't believe that Grants or Woolworth's needs help from the city of Boston," he said.

The city believes otherwise. "The business district plays a central role in defining the image of a neighborhood," observes John Weis, director of the Office of Neighborhood Services for Boston Mayor Kevin White. "If you drive through somewhere and see a row of abandoned storefronts, you won't stop to find out if there are some nice residential areas nearby. And, if you go to the suburbs to do all your shopping, eventually you're going to think about moving to the suburbs."

Boston will spend 20 percent of its federal Community Development [text illegible] and more over the next three years -- to build brick sidewalks, erect streetlights, provide mounted police patrols and finance a partial reimbursement for store owners making renovations in the nine neighborhood shopping areas targeted. Merchants seeking to open businesses would be eligible for state-backed low-interest development loans. The city will dispatch organizers to oversee each of the nine districts, all located in neighborhoods that have already declined or where the city fears possible decay.

Organizers will help merchants undertake joint advertising and will seek to recruit businesses by changing public images of the neighborhoods.In the case of Grove Hall, for instance, an organizer already on the jobs tells prospective businessmen of a city survey that shows that many middle-class black homeowners in the area now drive miles to the suburbs to do their shopping.

"We hope to provide the neighborhood business district with the kind of agent suburban shopping malls have," said neighborhood services director Weis. The aim, he says, is not to fill all the shopping needs of neighborhood residents -- as these older Main Streets once did -- but to provide at least the basics: a supermarket, drug store and hardware store, as well as a neighborhood meeting place.

"There is something socially very good," said Weis, "about people walking through their neighborhood marketplace and stopping to talk to their neighbors."

The chief concern at the coalition of opponents of the measure was that traditional human services programs, ranging from day care to transportation for the elderly would lose community development funds while the money went to finance new businesses. Indeed, when orgiginally proposed in June, the community development budget would have eliminated funding for all such human services programs.

Under pressure from the city council, the White administration finally agreed to fund many such programs, but at lower levels than at previous years.

Weis concedes that the business district plan is not the traditional big-city liberal machine for the poor. He compares it, in fact, to the proposal by conservative Republican Congressman Jack Kemp of New York to establish inner city "enterprise zones" where taxes are kept low in order to spur development. But Weis insists that programs of direct aid for the needy can find funds from other sources and revived business districts represent the best use of the city's limited federal aid.

"We're not talking about bringing Lord and Taylor to the ghetto," Weis. "We are talking about people having a place to buy the paper and get a can of paint. And we think those are important."