Promoters of a 160-mph bullet train designed to revolutionize travel in the jammed Los Angeles-to-San Diego corridor announced today that they have scrapped the $3.1 billion project for lack of funds.

Lawrence D. Gilson, president of American High Speed Rail, which had proposed the controversial project, told a news conference here that the company needed an additional $50 million, after spending $10 million on initial planning, but could not find it.

"The effort to raise the $50 million was a race against the clock and a challenge to find a large pool of capital willing to invest in a new U.S. industry," Gilson said. "There is no sufficiently large-scale funding source of risk capital in the U.S. financial world."

Local officials who feared heavy noise and vibration from trains whizzing by every half-hour applauded the announcement. "The whole project was ill-conceived," said William Huston, city manager of Tustin, which spent $175,000 fighting the high-speed train.

Bullet-train promoters had promised to whisk travelers the 132 miles from downtown Los Angeles to downtown San Diego in 59 minutes, less than half the time of an ordinary train trip, and more frequently and conveniently than air travel. The project was seen as a crucial test for bullet-train proposals in other heavily traveled corridors, including Tampa-Miami, Dallas-Houston, Philadelphia-Pittsburgh and Cleveland-Columbus-Cincinnati.

Early enthusiasm for the project led the California legislature to pass a bill in 1982 exempting the bullet train from many environmental protection studies that would have slowed its progress and authorizing as much as $1.25 billion in tax-free revenue bonds to help pay for it.

But citizens' groups and city officials along the route of the proposed electrically powered trains began to present studies showing that potential ridership for the line was much lower than had been predicted.

Gilson said the additional $50 million was needed to make down payments on rights of way and to keep operating through next year, when construction was to begin. He said Amtrak has purchased the company's engineering plans for $200,000, but an Amtrak official said the quasi-governmental agency has no plans to build a bullet train.