Every time she answers the phone, there is a new horror story: people crying and begging for food, cancer patients with no money for treatment and no place to turn, people who threaten to commit suicide and sometimes do.

"We're turning many of them away," said Elena Ackel, a legal services lawyer in Los Angeles. "We try to find private lawyers to refer them to, but there are so many. We've had to close half of our offices, and we're down to six lawyers covering 250,000 poor people. It's impossible. It's depressing, but there's nothing we can do."

Ackel is on the front lines in a battle that has raged over the future of the Legal Services Corp., the government-funded program that provides free legal assistance for the poor, since President Reagan took office.

With a reduced budget, she and other poverty lawyers have tried to cope with a steadily increasing volume of clients created by soaring unemployment and administration cutbacks in social programs.

Reagan has twice tried to abolish the program and been rebuffed by Congress. But last year, Congress did agree to cut the budget by 25 percent of the 1980 level, to $241 million, and it has stayed there for two years.

Last week, Reagan withdrew his nominations to the Legal Services Corp. board of directors when the Senate sent word that it would not confirm two of the most conservative nominees. But the board, which still holds recess appointments, will meet this week to try to adopt regulations limiting the cases the program's attorneys can handle.

William F. Harvey, chairman of the board and one of the nominees the Senate said it would reject, said recently that he is satisfied with the board's work in the last year. "When I get 50 miles from Washington, I get substantial support for our board and what we've been doing . . . . We get commendations, congratulations and pleading that we stick with it," he said.

During the first year of the Reagan budget cuts, the Legal Services Corp. lost 1,773 lawyers, nearly 28 percent, and closed about 20 percent of local offices providing help to the poor. Although figures have not yet been tabulated, there have been further reductions this year.

Legal services lawyers across the country say there have been dramatic reductions in the caseloads they can handle. In Indiana, for example, state director Norman Metzger says the program is accepting only half of the number of clients it did last year. What happens to the others? "Who knows?" he said. "They're just faceless people out there. No one knows what happens to them."

Jonathan Stein, a Philadelphia legal services lawyer, says that because of cutbacks and the huge increase in the number of clients, his program is turning away all but life-or-death cases. "We have to help people who have their survival at stake. Those who would lose merely money or possessions, we can't put the resources into," he said.

Perhaps most distressing to poverty lawyers has been the necessity to turn away eligible poor people who have been cut from Social Security disability rolls. An estimated 225,000 have been cut since March, 1981, and many are eligible for legal services. Some have become life-or-death cases.

Sen. Howard M. Metzenbaum (D-Ohio) has begun keeping a "death list" of persons who died of their disabilities after benefits were cut off and has documented 35 such cases. Last week, he asked the General Accounting Office to begin an investigation. Nearly a year ago, Sen. Carl Levin (D-Mich.) announced he had documented 11 suicides among persons whose benefits were cut off.

Ackel says she is urging private lawyers to take the disability cases. Of the 50 percent nationwide who appealed cutoff of their benefits, two-thirds were reinstated. But fees in such cases are not large, and most private lawyers have little or no experience in Social Security law.

"They're denying people with terminal cancer, people who obviously can never work again," Ackel said. "In those cases, it's not that they were not going to die eventually. It's that the government is making the last year or so of their lives the most horrible imaginable by not giving them enough money to have anything to eat."

"The worst thing of all is that there's just nothing we can say to them," she said.

Legal services law is not glamorous. Lawyers start at $17,700 and spend virtually all of their time on the everyday problems of poor, often desperate people. They deal with evictions, divorces, child custody, family violence, disputes over bills and questions of eligibility for welfare, Social Security and other government payments. They deal only with civil cases. In criminal cases, the Supreme Court has ruled that courts must provide lawyers for poor people.

The program dates to 1965 and President Johnson's war on poverty. It started in the Office of Economic Opportunity with the blessings of the American Bar Association, which recognized that the private bar could not donate enough time to handle the needs of the poor and that many of the nation's ablest lawyers had no experience in dealing with problems of the poor.

The program, which tended to attract young, liberal lawyers, had its detractors. Some conservatives were enraged by successful class-action suits brought by poverty lawyers against government agencies in such areas as conditions in mental hospitals and prisons, rights of migrant workers and rights of the poor to welfare or food stamps.

Among those critics in the late 1960s was Ronald Reagan, then governor of California. The California Rural Legal Assistance program, funded by OEO, had successfully sued to extend the rights of farm workers, to restore Medicaid cuts and to protect rights of Spanish-speaking state residents.

In 1970, Reagan attempted to veto federal funding for the program in his state. The issue was handled for him by Edwin Meese III, then his executive assistant and now White House counselor. The OEO eventually overrode Reagan's veto, but Reagan and Meese remain foes of the program.

Because of that incident and later efforts by the Nixon administration to destroy the poverty law program, a bipartisan Senate group led by Walter F. Mondale, then a senator from Minnesota and later vice president, proposed a bill to insulate the program from politics. In 1974, Congress enacted the Legal Services Corp. as a semi-independent agency to provide free legal services to the poor.

For nearly the first year of his administration, Reagan ignored the Legal Services Corp. board. White House sources have said he believed Congress would approve his plans to dismantle the program and saw no need to make appointments.

When it became clear that Congress would not acquiesce, Reagan rushed last New Year's Eve weekend to take over the board before funding for 1982 went out to the 326 programs across the country. He was too late. Contracts had been settled more than a month earlier.

Critics have charged that Reagan is trying to do through the board what he could not accomplish in Congress.

Dan J. Bradley, who resigned as president of the Legal Services Corp. board last March, said in a recent interview, "I don't think there's any doubt the Reagan administration would like to totally dismantle the legal services program and return responsibility . . . to the states. I think that has always been their plan. There's no question they're trying to do indirectly through the board what they cannot do directly through Congress."

Steven L. Engelberg, a member of the Legal Services Corp. board under President Carter, asks, "How many issues do they have where they can really deliver for the far right? They view legal services as the embodiment of left-wing activism--hard-core lefties running around organizing demonstrations and sit-ins--and it fries their ass that the government is paying them to do it."

Few of the appointees to the 11-member board have any experience in poverty law. Some are past enemies of the program, and several have been criticized as insensitive to needs of the poor.

Last October, the board chose as its new president Donald Bogard, 41, an Indianapolis lawyer. He spent most of his career in the Indiana attorney general's office and more recently served as head of litigation for Stokely-Van Camp, defending the company in suits brought by legal services lawyers for migrant farmworkers.

Harvey, an Indiana University law school professor who once taught Bogard, says he wants to see the program "substantially reformed."

Harvey blames legal services attorneys for the program's problems, and his main target is class-action suits. If lawyers were not bringing such suits, he has said, they would have time to attend to problems of the poor. Legal Services Corp. statistics, however, show that less than 0.2 percent of cases in recent years have been class-action suits.

Harvey accuses the lawyers of bringing class actions to engage in "ideological joyriding to reform society in their image. They're using the poor and class actions to do that ." And he added that the days of the class-action suit are over. "It's done, over, not going to happen. . . ."

Metzger disagrees: "What's ironic in class-action suits is that we're alleging that government agencies are violating the law. It's no surprise they don't like us . . . but the problem is not that we file class actions. The problem is that we get gray-haired old men to agree with us. We don't decide class-action suits. Judges do."

When the board holds its last meeting this week, Harvey will push for a regulation that would severely limit class actions. It would prohibit Legal Services Corp. involvement in any class-action suit requiring expenditure of tax money by a government agency and would require lawyers to identify and obtain consent of every person involved in the suit. That could prove difficult, for example, in a case to improve conditions in a mental hospital.

Bradley charges that by moving to limit class-action litigation, "they're trying to reduce the controversial nature of the lawsuits we've been involved in. They would like a program where poor people sue only other poor people and nobody else." But he is convinced that even though the program is going through a difficult time, Congress will not let Reagan dismantle it.

"The history of legal services since 1965 has been similar to a roller coaster ride. We've had our peaks and our valleys. It's bad now, but I'm convinced the pendulum will swing the other way . . . We will weather the storm," he said.

While politicians debate the future of legal services, the caseload grows, and attorneys continue to struggle for their clients.

In Pennsylvania, for example, Stein worried last week about a new policy to drop all able-bodied persons between ages 18 and 45 from the $172-a-month general assistance program after three months. With a state unemployment rate of 12.1 percent and 100,000 people expected to be cut from the rolls last week, Stein was anticipating a new onslaught on his Philadelphia office.

"The cuts are coming at the time when people are in their greatest need," he said. "There's enormous homelessness, soup kitchens, emergency shelters. We all know they're inadequate. We have issues affecting hundreds of thousands of people when there's virtually no advocacy for them."

In Indiana, Metzger has been forced by budget cuts to shut down the Muncie office in an area where unemployment tops 20 percent. In rural areas throughout the country, offices have been closed. It may now take up to several hours to drive to the nearest legal services office, a major consideration for those without car and money.

Ackel, meanwhile, is trying to keep track of Kimberly Bailey, a middle-aged, mentally ill woman who lost Social Security disability benefits in June, 1981. A former legal services attorney helped Bailey reapply but, because of the backlog of cases, she did not get a hearing until last summer. She won but has received no money.

Ackel said she last heard that Bailey was living without heat or electricity in an open wooden lean-to in the hills above Santa Barbara, not far from Reagan's Rancho del Cielo. But no one has heard from her since the recent severe weather that ravaged California's coast.