When James C. Miller III first joined the Reagan administration in 1981 as the leader of its charge to deregulate industry, he called himself "the meanest kid on the block" -- purposely styling himself as someone bureaucrats would not want to cross.

Since then, the current chairman of the Federal Trade Commission has earned a reputation as an intelligent, genial and determined proponent of Reagan's free-market philosophy.

As Reagan's nominee to replace David Stockman as director of the Office of Management and Budget, the Georgia native is expected to please conservatives with his ideological zeal.

But Miller's critics say that his tenacity may be a liability, limiting his ability to compromise and negotiate in a manner that may be necessary to push a budget through Congress this year.

"He is very steadfast in his adherence to the fundamental principles of the Reagan philosophy," said Rep. James J. Florio (D-N.J.), who chairs the House subcommittee that oversees the FTC. "But that approach hasn't worked up to this point with Stockman in the role, and Miller is more dogmatic than Stockman was."

His supporters, however, praise him as an experienced administrator and executive branch strategist, with a shrewd understanding of numbers, policy and politics.

"His kind of tenacity is exactly what is needed" in the current battle to shape the federal budget, said Christopher deMuth, a former OMB official.

The post of OMB director would give Miller, 43, the power and prominence he reportedly has sought after years of service in three Republican administrations. As an economic adviser to presidents Nixon and Ford, Miller advocated reducing government intervention in the marketplace. He served in those administrations as an economist with the Council of Economic Advisers and as a member of the Council on Wage and Price Stability, making his mark as a forceful proponent of airline and trucking deregulation.

Miller continued to promote industry deregulation as an economist at the American Enterprise Institute during the Carter administration. Then Reagan tapped him to be his "regulatory czar."

He joined the Reagan administration as the director of OMB's office of information and regulatory affairs and also served as executive director of a presidential task force on regulatory relief headed by Vice President George Bush. In his dual role, Miller began cracking down on government regulation, repealing many of the last-minute rules issued by the Carter administration and designating other regulations -- particularly environmental and health and safety rules -- for review and repeal. Even more significant, Miller helped launch a new regulatory review process that gave OMB the power for the first time to review regulations -- and order revisions in them -- before they were publicly released.

Having set up a process to eliminate government interference in business, Miller moved to the Federal Trade Commission as chairman in September 1981. Of all the government agencies, Miller believed the FTC was one of the worst offenders in terms of meddling with business affairs.

With the same enthusiasm that he is said to devote to playing jazz trumpet and motorcycle riding, Miller immediately set out to reverse what he considered the "excessively adversarial relationship" with business and the FTC's "notion of national nannyism."

Among other things, he turned the commission away from a previous policy of attacking industrywide trade abuse by issuing regulations and instead started to address problems on a case-by-case basis. Additionally, he modified the commission's policies to make it harder for the government to sue advertisers for deceptive ads.

He unsuccessfully urged Congress to cut the agency's budget and to eliminate four regional offices.

In the process, he has earned a reputation among some Capitol Hill staffers as being unyielding and combative. Florio has expressed anger in public hearings over Miller's refusal, on legal grounds, to publicly answer some questions about the agency's activities.

Proponents of deregulation view his nomination to OMB as a sign that Reagan's regulatory-reform campaign will get renewed vitality. The campaign was viewed by many as having run out of steam shortly after Miller left OMB in 1981.

"This is very good for the regulatory side of OMB," said deMuth, who succeeded Miller at OMB. DeMuth noted that Miller's arrival comes at a critical time for OMB. The agency is trying to gain even more power over the regulatory process at federal agencies by a newly issued, controversial order requiring agencies to submit yearly regulatory budgets to OMB.