As President Reagan campaigned last year to shift power from the federal government to the state and local levels, one of his most visible aides was Richard S. Williamson, assistant to the president for intergovermental affairs and field commander of the fight for New Federalism.

That is now a seldom-heard phrase; the effort to free state and local governments from what Reagan once characterized as Washington's "silly rules" is stalled. And Williamson, 34, has left the main tent at the White House to become U.S. representative to international organizations in Vienna.

The apparent death of New Federalism is two stories. One tells of the difficulties of carrying out any substantial redistribution of power among levels of government; the other has to do with competition for power and prominence inside the White House.

Williamson--young, aggressive and intelligent--came to be distrusted by many Reagan aides; he was suspected of seeking other White House officials' jobs and criticizing them even as it became clear that his New Federalism mission would not succeed.

"Any conservative was going to have a rough time over there," said Williamson, a longtime Reaganite and former deputy to Sen. Paul Laxalt (R-Nev.) when he headed Reagan's 1980 campaign committee. "Whenever conservative criticism was raised, it added to suspicions about me as if I had control over all conservatives.

"There was paranoia and it led to suspicions about me . . . . I got caught in the tension between moderate chief of staff James A. Baker and conservative counselor Edwin Meese's shop, and I was not a big enough gorilla to protect myself."

Several White House officials said they felt that, as the federalism initiative faded, Williamson began scouting out other jobs in the White House. That, too, complicated his life.

Reagan laid out his New Federalism in his 1982 State of the Union address, portraying it as an effort to return $47 billion in federal programs to state and local control.

"In a single stroke," Reagan said, "we will be accomplishing a realignment that will end cumbersome administration and spiraling costs at the federal level, while we ensure these programs will be more responsive to both the people they're meant to help and the people who pay for them."

But deal after deal with the governors and mayors over the terms of the realignment fell apart.

"I think now it was a strategic error to put the federalism initiative on the table at the same time we were trying to get cuts out of a budget that had already suffered," said Williamson. "It poisoned the well for the federalism discussion because the mayors and governors were so concerned they were going be left holding the bag with a recession coming on."

The heart of the original program was to have the federal government take full financial responsibility for Medicaid if the states would agree to bear the full cost of food stamps and welfare.

It was a compromise for Reagan, who favored returning all the programs to the states. On the other side were the governors, who said they did not have the money to run those programs.

"Federalism is one of the basic policy underpinnings of this administration," said Robert B. Carleson, longtime Reagan aide and now the president's main adviser on federalism policy. "If not for the economic crisis, it would still be his number one priority."

But the economic crisis also made it harder to sell.

"It was a dream," said William Hudnut, the Republican mayor of Indianapolis, who was head of the National League of Cities during some of the bargaining with the White House. "Rich did a good job with what he had to work with. But it was not going anywhere with the states because of the fiscal problems . . . . It's not good to say, 'Here, the ship is sinking, you take over.' "

In addition to all the issues burdening the White House, there were internal divisions over New Federalism, with Williamson in the middle. Republican Gov. Richard A. Snelling of Vermont recalls three White House factions:

"One believed in federalism," he said. "I think the president and Rich were in that group. Then there were people who wanted to use federalism to reduce the budget. And then there were people who were anti-government. They not only wanted the federal government's influence shrunk, they wanted the local government shrunk."

As Williamson maneuvered, he says he felt increasingly isolated. He was losing to David A. Stockman, director of the Office of Management and Budget, who warned about the cost of picking up Medicaid and advised against making the swap. There were also policy-makers who said they felt that the idea was out of line with the president's conservatism.

Williamson began seeking out other ways of staying on the inside in the White House.

He was among those who urged senior administration officials to make Laxalt general chairman of the Republican Party, and he pushed Laxalt to accept the job. This put Williamson back in the action as a White House link to Laxalt. It also gave him added standing--some in the White House say leverage--over chief of staff Baker, his boss.

"That's grossly unfair," Laxalt said of the suspicions. "Rich never talked to me about Jim Baker, never played conservatives against moderates. He's just not that kind of person. I never once heard him criticize Baker or Mike Deaver, even at times when I sensed he was troubled and might have wanted to say something."

However, Williamson was trying to cement his standing as a key player in White House politics by succeeding political adviser Edward J. Rollins. Williamson said Baker and others had "approached" him about Rollins' job before the 1982 elections when there was talk that Rollins might go into private political consulting. Williamson often was included in politcal sessions where Rollins was excluded.

But when Rollins suffered a stroke before the mid-term elections, it was said at the White House that Williamson was critical of Rollins and continued to promote himself as a replacement, and that was resented.

When Williamson was offered a $250,000 job with the Beatrice Foods company, he let that be known, too. He said Baker and others encouraged him to stay at the White House, but again the episode was seen by some as a move to pick off a better job.

After deciding to stay, Williamson also raised his hand to replace Elizabeth Hanford Dole as head of the president's office of public liaison, which tries to reach out to constituency groups.

"Williamson went to Baker after he didn't get Dole's job," said a senior White House official, "and he asked him what his future was in the White House. Baker told him he was a young man and maybe he should go outside and make some money."

Asked for a comment on Williamson's work, Baker gave a terse appraisal: "Rich was the point man on the federalism initiative and did an excellent job working with the governors and other officials to build support for the proposal."

"He had a higher opinion of his political abilities than anyone else," said another senior White House aide who had differences with Williamson. "Here is a guy who managed former Illinois representative Phil Crane's losing campaign, he managed the losing effort on the Panama canal, and now he thinks he is good enough to take over politics at the White House."

Some people, Democrats especially, had looked on the New Federalism as a throwaway, an effort by Reagan to take attention away from the recession and the record budget deficit he also proposed last year.

At the very least, said Steve Farber, former executive director of the National Governors' Conference, "Rich and the president had a very narrow window to get the New Federalism through. There was momentum right after the State of the Union speech and a chance to get it done. They didn't do it . . . . The negotiations dragged and the political focus in Washington, in the White House, shifted."

"My argument," said Williamson, "was and is if you make these structural reforms for the long term, the federal budget will be stronger. That is, you'll have savings of money and you'll be better managed . . . . But to argue that help will come in five years is hard when the pressure is on now."

Looking back on the fight Williamson claimed some victories.

"In point of fact in 1981 we tried to get 88 categorical grants into block grants and we got 57," he said, while conceding that most of the 57 were small fish. "Well, we didn't get the big dollar amounts, but in some ways the little ones were more incestuous."

This year the White House has proposed a four-part block grant proposal that includes no swap of Medicaid for food stamps and welfare but, again, it is a small victory of Williamson's efforts towards increasing federalism.

"I would argue that Reagan's greatest impact has been in the changes he brought about in the domestic area," said Richard Nathan, a former federal official who is now a Princeton University professor and has studied the federalism effort.

"Data shows cuts by federal government have not been offset by state and local government spending. That is a significant reduction of government in domestic areas, which is just what Ronald Reagan wanted Rich Williamson to accomplish."