Twenty years ago, Francis E. Moravitz left a job in Hawaii to join President Johnson's War on Poverty at the newly created Appalachian Regional Commission. Today, as the commission's executive director, he is quietly preparing for its demise.

Moravitz seems philosophical. "I know that a lot of things we started will be continued once we're gone," said Moravitz. "We are keeping the faith."

For the past two decades, the controversial Appalachian Regional Commission has survived numerous attempts to kill it. But now the commission reluctantly is preparing to close up shop, operating under a plan that phases out its activities over the next few years. The commission staff has been cut sharply, from 118 in 1981 to 67 today.

"We're working under the assumption that the program will be phased out . . . and the commission will go out of business," Moravitz said quietly but emphatically.

Programs to build health clinics and improve other medical services would end this year. Construction of vocational facilities, job-training programs and water and sewer projects would end in 1987. The massive road-building program, known as the Appalachian Development Highway System, has the most distant deadline -- 1990.

But the demise of the program may come more abruptly.

The Reagan administration has asked Congress to close down the agency at the end of September, something the Senate Budget Committee also has recommended. And last week, Senate Republican leaders agreed with the White House that the commission should be killed this year.

Staunch commission supporters, such as Sen. John D. Rockefeller (D-W.Va.) and former senator Jennings Randolph (D-W.Va.), concede that it will not be easy to keep it alive. The retirements last year of Randolph, the commission's chief guardian angel in Congress, and Senate majority leader Howard H. Baker Jr. (R-Tenn.), another key Senate ally, were severe blows to the program's chances for survival.

Concern over the massive federal budget deficit has, in effect, pitted people of the Appalachians against bankrupt farmers, college students and veterans in the struggle for congressional attention and a shrinking pool of federal dollars.

The 13 governors on the commission reluctantly endorsed the program to wind down the work, believing that it was the best that they can hope to get, said Michael R. Wenger, the governors' representative to the commission.

"They were simply dealing with fiscal and budget realities, and also with political realities," said Wenger.

Those political realities include a shift in the national mood, he said. In the 1960s there was virtually a national crusade against poverty, racial injustice and other inequities, he said, but now, "That atmosphere is gone.

"I think a lot of people here at the commission are sad," Wenger said. "I think they think something very important is dying."

In 1965, when the commission was created, it was hailed as a cornerstone of President Johnson's War on Poverty. "This legislation marks the end of an era of partisan cynicism towards human want and misery," declared Johnson when he signed the bill.

It also marked the end of a long effort by Appalachian community leaders, business persons and politicians to focus national attention on the plight of their mountainous region, which stretches from Alabama to Quebec.

There was an abundance of natural resources like coal and timber in Central Appalachia, but the region was appallingly poor. Little of the wealth from coal and timber stayed in the area, and few industries were interested in moving to the isolated areas.

Families often lived far from the most basic health care. Hunger, infant mortality and illiteracy were startlingly pervasive. Raw sewage and mine acid were polluting streams, and strip-mining had ravaged mountainsides.

In 1960, Appalachian poverty suddenly captured national attention when John F. Kennedy took his presidential campaign to West Virginia. After his election, Kennedy pushed for the creation of a special Appalachian development policy, with support from a public whose conscience he had helped awaken.

But the program that eventually was created extended far beyond that Central Appalachian region of West Virginia, Kentucky, Tennessee and Virginia. The commission covered a wide territory, extending from New York to Alabama and Mississippi, and including 21 counties in southwestern Virginia and three in Western Maryland.

Some community activists in Central Appalachia believed that the commission should have focused on the hard-core areas. But a Democratic congressional staff member says the large size has been key to its legislative success -- most of the 59 House members and 26 Senators covered by the agency have been supporters.

The commission's legacy has been mixed. Commission staff members point with pride to dramatic changes:

* Infant mortality has been cut in half.

* So has the percentage of Appalachians living in poverty.

* In 1960, only 33 percent of Appalachian people had completed four years of high school, and in 1980 that figure was higher than 57 percent.

* The number of Appalachians receiving vocational education more than doubled between 1960 and 1980.

* The flood of people who left the region in the 1950s and '60s in search of a better life has been stemmed.

Despite these signs of progress, poverty and unemployment are still significantly above the national average in many areas.

The commission has been attacked for focusing too heavily on building highways, for pouring millions of dollars worth of concrete into the ground while families continued to live nearby in poverty. Of the $5 billion spent by the agency, more than $3 billion has gone to the Appalachian Development Highway System.

Randolph defended the road-building policy. The greatest problem facing Appalachia was the region's isolation, said Randolph. Rockefeller agreed, saying, "Roads and water and sewer come before the housing and before the private sector jobs. You've got to start with those."

The commission also was attacked for its decision to target "growth areas," those areas most fertile for economic development, rather than areas of greatest need. That meant that poor, rural towns such as Pilgrim Knob in Buchanan County, Va., saw little of the money, said Robert W. Horn, administrative assistant to the Council of Southern Mountains.

Horn, who grew up in Pilgrim Knob, said most of the commission money spent locally went to the county seat of Grundy, about 20 miles away. But he added that commission funds did help build a four-lane highway, a water and sewer system, a vocational school and health clinics in the county.

"If you believe that Kennedy and Johnson intended for the commission to reach people in the hollows, it really hasn't reached them," said Horn. "But it has helped other people in Appalachia."

But supporters say the architects of the Appalachian development program never anticipated that it could wipe out all the ills of the region. The commission "was meant as an invitation, a challenge to the people of Appalachia, not to move and run away from the problems, but to stay there and to help solve them," said Randolph.

The commission is an unusual hybrid -- the money is federal, the spending local and the decision-making is federal and state. The 13 governors are all members of the commission, but collectively they have only one vote. They appoint a representative to look out for their interests on a day-to-day basis.

The 14th member of the commission is appointed by the president, and that person has one vote. Thus any project receiving commission funds requires both federal and state approval. The commission staff is run by an executive director chosen jointly by the governors and the presidental appointee.

Projects are recommended by the governors and approved by the commission. So far, about 1,831 miles of roads and 700 vocational schools have been built, and basic health care services have been expanded so that they are easily accessible to most families, according to the commission.

Winifred A. Pizzano, the Reagan administration appointee on the commission, is among those who believe that the program has helped raise living standards and improve economic development.

But, says Pizzano, that is precisely why it should be ended.

"The administration feels that we have created a capacity [in Appalachia] to compete economically" with other regions, which was the original intention of the program, said Pizzano. "The problems that remain are those that can be addressed either locally or that will be addressed by other major changes in our economy."

The Reagan administration is not the first to target the Appalachian Regional Commission. The Nixon administration proposed eliminating the program as part of a massive reorganization effort.

Back then, Randolph brought a White House meeting to a standstill when he stood up and informed presidential aide John D. Ehrlichman that Congress would not allow the commission to die. And it didn't.

President Carter shared Nixon's skepticism about the program. In a leaked memo, Carter said he considered the regional commission "a waste of time and money," something simply to channel federal funds to governors. But Carter, acknowledging the program's political popularity, made no attempt to kill it.

By 1981, however, the atmosphere had changed. Although the Reagan administration failed to kill the commission, it did manage to get the budget cut almost in half, from $302 million to $152 million. While commission advocates who fought to save the commission declared success, some community activists were not so sure.

Anne Leibig, who went to work in Appalachia in 1962 as a Roman Catholic nun and remained in Scott County, Va., when she married, says the reduction wiped out any chance of getting commission funds to reopen a sewing factory that had burned down.

Rep. Tom Bevill (D-Ala.), chairman of the House Approprations subcommittee with jurisdiction over commission funds, said the House probably will provide another $150 million or perhaps slightly less this year to fund the program to complete commission work.

In the Senate, however, things are less certain. Vocal opponents, such as Sen. John H. Chafee (R-R.I.) have promised to continue their fight against the commission, which Chafee says is a waste of money. In addition, says commission spokeswoman Ann Anderson, the agency expects little support from the Senate Republican leadership now that Baker is gone. "There's nobody geographically or philosophically sympathetic," she said.

"We have a rocky road ahead," said Randolph