Don Todd, executive director of the American Conservative Union, looked almost embarrassed as he viewed the rows of true believers, conservatives who had been so long ignored. "I kind of feel like saying welcome to the establishement," he said.

There was a few snickers in the audience. But the statement had an essential ring of truth -- after years of lonely battles on fringes of American politics, conservatives are finally inside government.

If there was any doubt of that, the Reagan administration tried dispel it this week at an annual conservative political action conference, sponsored by ACU and Young Americans for Freedom, at the Mayflower Hotel. The roster of speakers read like a who's who of the administration and wad led by the president.

This caused a fundamental change in the minds of conservative activists, who only four years ago talked of forming a third party.

"It gives us the feeling we're in power. Before, it was like our values and programs were under siege. We were the outsiders," said William Hawkins, an economics professor from Asheville, NC. "It's a completely new feeling."

That feeling has caused readjustment problems for conservatives as the Reagan administration asked them to postpone action on a host of social issues, such as school prayer and abortion, until the nation's economic ills are dealt with.

"We're like the dog who has been chasing cars all of his life," ACU chairman Rep. Mickey Edwards (R-Okla.) said. "Well, we've caught it. Now we've got to decide what to do with it."

Reagan has always had a special, if somewhat aloof, relationship with the conservative groups, and they consider him their own. He has spoken at six of the eight conservative conferences, served on the board of directors of both groups and signed his first YAF fund-raising letter in 1962.

"Ronald Reagan had a national constituency as the titular head of the conservative movement, and that is the constituency that made him a presidential candidate, not the fact that he was a Republican or a former governor of California," YAF executive director Robert Heckman said yesterday. "That was what kept him in the national spotlight all these years."

Some would disagree with that analysis and question how firmly conservatives have entrenched themselves in government. But there is little doubt that conservative activists provided the shock troops of Reagan's campaign, and the administration is anxious to keep them happy.

Yesterday, out rolled Reagan, Vice President Bush, Budget Director David A. Stockman, Labor Secretary Raymond J. Donovan and several lesser-known White House officials to make the administration's case.

Borrowing rhetorical phrases from the left of the 1960s, they talked of a "revolution" in policy, "a fundamental change in government" and a returning "power to the people." The conservatives were told what they wanted to hear.

Bush, pounding on the lectern, lambasted "liberals" and "progressives" and "the tired, shopworm liberal policies of the past."

"This president is not going to be deterred from his course," he said. "The conservative mandate delivered last November -- the Reagan mandate -- is going to be carried out. I'm proud not only to have served as his running-mate last fall but to serve him and the principles he stands for now."

The appearance was symbolically important for Bush. As Reagan's primary opponent for the Republican nomination, he has long been a moderate anathema for many conservatives, and YAF's report declared that one of the organization's chief goals will be to keep him from getting the GOP presidential nomination in 1984.

Bush received standing ovations as he entered and when he finished, but Stockman received the loudest applause. He provoked the loudest cheer when he deflected a questioner asking why the administration had not proposed cutting the budget even more by saying:

"If Congress wants to cut more, we're not going to stand in the way."

Reagan's program "isn't gradualism," Stockman said. "His isn't an effort to change the dimensions of our basic economic policy in a modest way. It's an effort to reserve fundamentally the course of what we're doing at the federal level."

Conference leaders insisted they are willing to support Reagan's economic agenda, even if it means temporarily postponing action on their favorite social issues. "As far as I'm concerned, the White House agenda is ours," Rep. Edwards said.

The only real criticism came on Reagan's appointments. Van Archer, Reagan's campaign chairman in south Texas, complained that seven people had been appointed to jobs from his area and "not a one of them did a lick of work in the campaign."

In a room next to the main conference room, booths manned by various conservative groups stood as a stark reminder that Reagan will be called to deal with many conservatives agendas.

Groups in the booths passed out pamphlets against gun control, school bushing, legalized abortion, banning school prayer, pornography, sex education, sex on television and "humanism, socialism and moral permissiveness in our society."

"Now is the time for moral Americans to stand up for what is right and decent in our country and change what is vile and wrong," said a leaflet published by the Moral Majority.