The Philadelphia waterfront was misidentified as Pittsburgh in a picture caption yesterday.

Time was when you brought an extra shirt to the office in this once-sooty city. Street lights shone all day and smoke from down-river steel mills blackened the buildings.

Today the once-proud sobriquet "Steel City" is in disfavor. The Chamber of Commerce touts a "City of Champions," conjuring up its winning sports teams. The convention bureau, in a recent ad, suggested a new slogan: "San Francisco of the East."

With the decline of the steel industry and the rebuilding of its downtown into a glittering fistful of skyscrapers, Pittsburgh is finding a new identity -- but the old stereotype is difficult to shed.

The city's national image is "kind of a joke," said Wesley Posvar, chancellor of the University of Pittsburgh, now the largest local employer. "Pittsburghers are traditionally self-conscious and apologetic because of the obsolete image of steeltown, the smoky city."

Even as the nearby mill towns of the Monongahela Valley are suffering from high unemployment, and community leaders wring their hands over how to retrain laid-off steelworkers, local planners are bullish about the city's transition from a reliance on heavy industry to a more diversified economy.

The steel-making work force has dropped from 90,000 five years ago to 45,000 today. But in the same period, the area has gained 40,000 new jobs in high technology, according to Ray Christman, economic development director for the Allegheny Conference, an influential civic group.

"Pittsburgh is a growing center for industrial research and advanced technology," said Posvar, whose 35,000-student university, along with nearby Carnegie-Mellon University, has been a catalyst for the change.

"We have one of the highest concentrations of scientists and engineers anywhere in the United States. We're becoming a more compact version of Boston's Route 128 and Silicon Valley."

Only a few miles up-river from the gloomy smokestacks and mountains of coal, Pittsburgh's central city radiates prosperity. Subscriptions to the symphony and the ballet are up. Stores are full of Christmas shoppers. More skyscrapers are under construction, reflecting the city's position as the nation's third-largest headquarters of Fortune 500 companies, after New York and Chicago.

Despite its brash, blue-collar ethos, the city has become a place where "Yuppies" feel at home.

Under the vaulted stained-glass ceiling of the restored Pittsburgh and Lake Erie Railroad Terminal, they dine on stuffed oysters and gaze out at the shimmering night river.

Next door, they shop at a string of boutiques: Crabtree & Evelyn for English soaps, Maison de Campagne for French pottery.

"What city offers waterfront dining, international cuisine, trolley cars and one spectacular view after another?" a convention bureau ad asks in a recent issue of USAir magazine.

But the San Francisco analogy has a certain irony. Gulf Corp., the largest Fortune 500 company based in Pittsburgh, is being gobbled up in a $13.3 billion merger with San Francisco-based Chevron.

Gulf's majestic 38-story building, symbol of the company's 80-year association with the city, is to be sold. The company's 1,500 local employes are waiting to learn who will be dismissed, who moved to the West Coast.

Nonetheless, the loss of Gulf is being taken in stride. Harold H. Hamer, Gulf's executive vice president, compares the situation to New England's loss of textile and shoe industries after World War II, which forced a major change in the area's economy. "It's a wrenching experience" for Pittsburgh, he said, "but it will work out over time."

Along with several Gulf executives, Hamer plans to open a venture capital firm to attract new business here. "Small companies are moving into the area," he said. "Pittsburgh's future is going to be very upbeat."

About 190 foreign companies -- particularly German and Swiss -- have moved in over the last decade, attracted, Christman said, by the area's rolling topography and Midwestern work ethic. Mobay Chemical Co., a division of Germany's Bayer Corp., has its U.S. headquarters here, for example, and employs 1,500 people, mostly Americans.

Recently Pittsburgh beat out Maryland and other contenders as the new site for the Defense Department's $100 million software research institute. The coup, Christman said, "sends out a national signal that this community is at the top of the pack in terms of technological possibilities."

Though the loss of Gulf is "like losing a member of your family," as Posvar put it, he said he expects to be able to make up the university's share of the roughly $2 million a year that Gulf gave to Pittsburgh institutions. "A half-dozen other corporations are also very generous and will carry on," he said.

Founded with money from the Mellons, one of Pittsburgh's richest families, Gulf was "a model corporate citizen," said Margot Woodwell, vice president of local public television station WQED. "There's a poignancy to the fact they're leaving, but it's obviously not the end of the world."

Chevron has agreed to pick up through 1987 Gulf's underwriting of the popular National Geographic series produced by the station.

Despite the allure of San Francisco, many Gulf employes say they would rather stay put. "There's a joke going around that half of us are scared we won't be asked to go to San Francisco, and half of us are scared we will be asked," said Susan K. Breon, a public affairs officer who does not plan to move west.

Good city public schools and low housing costs are part of the reason. "I have gotten in trouble for criticizing certain Southwest cities built on a flat plain where it is 120 degrees in the shade," Posvar said. "But this is becoming an exciting place to live, culturally and intellectually. In 20 or 30 years, Pittsburgh will be the envy of the Sun Belt."