After considerable controversy and much seesawing, the General Assembly appears ready to extend certain protections against discrimination to the mentally ill.

House-Senate conferees have agreed to restore the protections, barring discrimination in areas such as employment and housing, that were struck from a handicapped-rights bill in the Senate.

The conferees say they expect the full House and Senate to go along with their decision.

In the weeks since a tense fight on the Senate floor over the provisions, the opposition to including the mentally ill appears to have collapsed. Sen. Dudley J. (Buzz) Emick (D-Botetourt), who led the fight to limit the protections, said today he will support the bill as it emerged from conference and raise no further objections, "though it's still got some problems."

Sen. Joseph V. Gartlan Jr. (D-Fairfax) said Emick told him he was simply "sick of fighting" over the bill, the product of numerous compromises and a fair amount of name-calling.

As hammered out in two legislative sessions, the handicapped rights bill, sponsored by Del. Warren G. Stambaugh (D-Arlington), falls roughly into the middle of a range of statutes adopted by other states.

It would put Virginia in the same position as least 26 other states in extending antidiscrimination protections now in place for the physically handicapped to the mentally retarded and mentally ill, who together with the physically handicapped make up a group of 750,000 in Virginia.

Emick had persuaded a slim majority of senators to adopt an amendment that would have excluded those who have shown a prolonged pattern of psychotic, behavioral or emotional disturbances on grounds that such individuals would present too much of a risk for employers.

The bill's supporters, arguing that the amendment would exclude anyone who visited a psychiatrist more than once, won the point in conference.

The bill would go further than laws in several other states in requiring an employer to make a "reasonable accommodation" to hire the handicapped.

But it would strictly limit the cost of "accommodation" in a way that many states do not. As a concession to business groups, Stambaugh agreed to require an expenditure of no more than $500 for employers with fewer than 50 workers, although activists for handicapped rights argued that the provision gives most employers too much of an out.

Like many laws in other states, the bill would empower a state agency, which would be called the Department for the Rights of the Disabled, to investigate, mediate, and as a last resort file suit in discrimination cases.

It would not require the department to provide employers with what one legislative observer called "a pedigree" for someone with a history of mental illness -- a certification that, in the department's view, the person should be hired or retained on the job.

An amendment to require such a certification was was adopted on the floor of the Senate but dropped in conference.

The bill would protect employers from being sued for negligent hiring if a handicapped employe caused an injury during the course of carrying out his duties.

Business groups demanded legal protection for employers in case an employe, in the words of one lobbyist, should "go berserk" on the job and injure someone.

The passions stirred by the bill found vent in some harsh name-calling. Supporters called one of the bill's critics a "bigot" and another "a jerk"; an opponent referred to those who suffer from mental illness as "nutty as fruitcakes."

George Stoddart, a spokesman for Gov. Charles S. Robb, whose administration has pushed for two years for a handicapped-rights bill, described the conference version as "great" and said it "satisfies both sides."