ADVOCACY GROUPS for the poor and the elderly have reacted with concern to new proposals by the Legal Services Corporation that would tighten eligibility for federally funded legal assistance. The corporation replies that the harshness of the rules is being exaggerated, and anyway it makes sense to limit eligibility for the program to the very poorest people, since funds have been sharply cut.

Advocacy groups are entitled to considerable suspicion about the beneficence of any change in legal service rules made during this administration. The Legal Services Corporation is a nominally independent agency, but the Reagan administration--which views the program as a troublesome instrument for social change--has sought repeatedly to abolish it, and has angered both houses of Congress in its appointments to the corporation's board.

Many of the proposed changes are, however, relatively innocuous. The program already limits eligibility to individuals with gross income of less than $6,075 a year and to families of four making less than $12,375. It may strike you that the ineligible people with before-tax income only slightly above those limits can't afford to buy legal services on their own. But that's an unfairness that already exists. And local programs will still be able-- though with somewhat less latitude than before-- to serve people with somewhat higher incomes if there are mitigating factors such as high medical expenses or debts.

In measuring income, the new rules would count welfare, Social Security and other government payments just as earnings or other private income. But why not? In terms of spending power, government money is often "better" than other income because it isn't taxable.

More troubling are the tough new asset limits, which would hit especially hard on the elderly and those who live--as poor people frequently do--in large and disorganized households. The corporation maintains that the local program could disregard excess assets if it decided the case merited assistance. But if so much discretion is to be allowed, why put local administrators through the cumbersome task of detailing full household assets?

In fact, why add more red tape at all? The independent local legal service programs are already struggling to serve their burgeoning clientele with sharply reduced resources. They are guided by local citizen boards on which lawyers hold the majority of seats and over which local bar associations have newly strengthened control. There is no evidence that these boards are squandering their resources on undeserving clients. Why is it that the Reagan administration can only see the virtues of local discretion when it comes to programs that it happens to favor?