The U.S. government says it keeps no records on unidentified flying objects, because they don't exist. But 131 secret documents about UFOs in the files of the National Security Agency have become the subject of an intense legal battle.

Would the documents disclose startling details about the flying saucers, or UFOs, that more than 10 million Americans claim to have seen? Would disclosure compromise NSA's sophisticated eavesdropping techniques? Is it all buncombe? Or is it all too frightening to contemplate?

Apparently only NSA can answer those questions and NSA isn't talking. NSA, in fact, refuses to talk and its reticence is being challenged in the federal courts.

Eleven months ago, a U.S. District Court judge here, Gerhard A. Gesell, held that the documents were so sensitive that their public release might endanger national security. Gesell did not review the documents. His decision was based on a 21-page top-secret affidavit given him in chambers by NSA.

The battle last week reached the U.S. Court of Appeals, where a small organization known as Citizens Against UFO Secrecy (CAUS), arguing for release of the NSA documents, told a three-judge panel that the government cannot have it both ways.

If UFOs do not exist, CAUS attorney Peter A. Gersten of New York told the court, then Uncle Sam has nothing to hide. If they do exist, then we may be in big trouble--and we ought to know about it. But NSA's lip stays buttoned.

The suit brought by CAUS under the Freedom of Information Act is another in a series of challenges to the powers of spy outfits such as NSA, the Central Intelligence Agency and the Defense Intelligence Agency to withhold virtually anything they want under the guise of national security.

"The government position is that UFOs are not a threat and that the government does not study UFOs," Gersten told the appeals panel. If the panel does not order disclosure, he said, Gesell at least should be directed to review the 131 UFO documents and decide for himself just how sensitive they really are.

Arguing for NSA, attorney Cheryl M. Long said there is no way the documents, no matter what they show, could be released without exposing and compromising the intelligence-gathering techniques of the agency, which include global electronic snooping and code-breaking.

CAUS' appetite for government documents was whetted by the 1978 release of Air Force and CIA reports on UFO sightings that were deemed to have no national security implications. Ground Saucer Watch, a Phoenix-based UFO monitoring organization, forced the release through freedom-of-information suits.

Those documents revealed that in October, November and December of 1975, reliable military personnel saw unconventional and unexplained aerial objects hovering around nuclear weapons storage sites, aircraft alert areas and missile control complexes at installations across the northern United States.

In some instances, as radar sightings of the objects were made, Air Force fighter planes were sent aloft in unsuccessful pursuit, although the records gave no indication that the fighters fired on the intruders.

CAUS and the Fund for UFO Research, based in suburban Mount Rainier, noting that last week was the sixth anniversary of a celebrated series of sightings over Loring Air Force Base in Maine, brought a witness to Washington to tell his story at a press conference.

Stephen B. Eichner, a now-retired sergeant who was on duty when a strange object hovered over the Loring ammunition dump, described in some detail what he saw in 1975 and said that officials at the base tended to discount his and other witnesses' reports.

Eichner told how he and fellow airmen had seen a football-shaped reddish orange object, three or four car-lengths long, hovering over the Loring dump. He said the object suddenly vanished, then reappeared some distance away at the end of a runway.

Numerous other visual and radar sightings were made at Loring. Air Force planes were scrambled in a luckless attempt to track down the object. The Air Force generally theorized that the object was an unidentified helicopter, but Eichner said last week it made no noise and could not be mistaken for a helicopter.

Gersten said CAUS intends to file another freedom of information suit against the Air Force this month in an effort to force disclosure of more data on the series of still unexplained 1975 sightings over Strategic Air Command bases.