ATLANTA -- Once a mighty southern institution whose hooded members staged gruesome lynchings and hob-nobbed with powerful politicians, the Ku Klux Klan has fallen on hard times in the land of its birth.

Klan watchers across the South, and even KKK members, said the "invisible empire" is at its lowest ebb in decades. They attribute the Klan's dwindling influence and shrinking membership largely to the federal government's campaign against racial violence and successful civil suits filed on behalf of KKK victims.

The Klan's most crushing setback occurred in February when an all-white jury in Mobile, Ala., ordered Robert Shelton's United Klans of America to pay $7 million in damages to the mother of a young black hanged from a tree after Klansmen slit his throat in 1981.

"That was stunning," conceded Imperial Wizard James Venable of the National Knights of the Ku Klux Klan. "Robert Shelton and the UKA have all but been put out of business. I've been in the Klan since the 1920s, and I never thought I'd live to see something like that."

Venable, an attorney in Stone Mountain, Ga., has held a Klan rally every Labor Day weekend since 1930. He said he cannot remember when things looked worse for the KKK.

"All these suits have everybody afraid to turn around for fear we'll be taken to court," he said. "This past summer was one of the quietest, as far as Klan activity goes, I can ever remember."

In the Alabama case, the UKA, for years the strongest and most violent of about 40 Klan factions nationwide, was first hit with the convictions of two members in the murder of Michael Donald, 19.

Then came the civil suit, in which attorneys for the Southern Poverty Law Center (SPLC) won a landmark judgment from white jurors who held that the UKA and six of its members were financially liable for Donald's lynching.

"It was an especially important decision because it marked the first time a Klan organization ever has been held liable for the actions of its members," said Morris Dees, an Alabaman and executive director of the SPLC, a nonprofit law firm based in Montgomery.

The Donald case, in which the UKA had to deed the title of its Tuscaloosa office building to the dead man's mother, Beulah Mae Donald, was the SPLC's fourth major triumph over the Klan in recent years.

Other cases considered victories by the SPLC include:

A 1980 civil suit against the Invisible Empire, Knights of the Ku Klux Klan, of Gardendale, Ala., on behalf of Southern Christian Leadership Conference demonstrators attacked by Klansmen at Decatur, Ala. The suit has yet to be tried, but the SPLC produced evidence that led to indictment in 1984 of 10 Klansmen, two of whom have pleaded guilty to civil rights charges.

A 1981 suit filed in Galveston, Tex., on behalf of the Vietnamese Fishermen's Association against the Texas Knights of the Ku Klux Klan. A federal judge ordered the KKK to stop harassing the fishermen and shut down its paramilitary operation.

A 1984 federal suit in North Carolina against the White Patriot Party, which was ordered to cease its paramilitary activities. The SPLC later produced evidence that the court order was being ignored, leading to conviction of two WPP leaders and dissolution of the organization.

"These suits and others have stemmed from our Klanwatch Project, which we started in 1980 in an effort to drain the Klan's financial resources," Dees said.

Dave Holland, grand dragon of the Atlanta-based White Knights of Georgia, said the SPLC strategy has worked.

"Dees wants to keep us tied up in court, and the Southern Poverty Law Center has enough money to do it," Holland said. "What's more, he works hand in hand with the government. Much as I despise him, I have to admit he's a genius at what he does. It keeps us broke just paying our legal fees."

Holland, a construction worker, is a defendant in a suit brought by Dees against Klansmen who harassed Atlanta Council member Hosea Williams and other civil rights marchers last January in Forsyth County, Ga.

A week after that incident, 25,000 demonstrators from across the country joined Williams for a second parade in the county. In August, a KKK march there drew about 100 participants.

"That just shows you what a pitiful state we're in these days," Venable said.

Venable looked at about 400 self-proclaimed "racialists" attending his Labor Day rally and shook his head.

"Used to be we had dozens of chartered buses from all over the country bringing people in for our Labor Day rally. Why, governors used to be KKK members. Now look at us," he said.

Stuart Lewengrub of the Anti-Defamation League's southeastern office in Atlanta also sees the Klan losing its clout.

"When I arrived in the South 20 years ago, it wasn't uncommon for politicians and law enforcement officers to be Klan members, or at least open supporters," he said in an interview. "Now, the Klan has very little political influence. We think the KKK is at its lowest ebb in 30 or 40 years, both nationally and in the South."

Founded in late 1865 by six former Confederate officers at Pulaski, Tenn., the KKK has had a history of ebb and flow, depending upon the prevailing social climate. Dees, citing recent incidents of random racial violence, cautions that the Klan has the potential to rise again.

"We've got them on the run, but the Klan is far from dead," he said recently. "The hard-core Klansmen are still very much there, even if they're not so visible at the moment. And, remember, the Klan leadership is now permeated with neo-Nazis."

Swastikas were in evidence at the Labor Day rally, where robed klansmen and participants in combat fatigues began and ended conversations by shouting "White Power" and giving the stiff-armed Nazi salute.

Holland said he had hoped for a larger turnout at Stone Mountain, where the Klan was revived in 1915 after one of its fallow periods.

"These are bad times for us," Holland said. "We've lost some people, and we haven't been very active of late, largely because of Dees. But the ones he's run off have been the weak ones. The rest of us, the ones at this rally, are far-right radicals, and we're not about to quit."

The rally leaders said they are searching for an issue, such as busing in the 1960s and mill closings in the 1970s, to bring people back to the Klan.

"Some of our Klan leaders are trying to talk about things like abortion, but I don't think that works with most people, and the death penalty {strongly favored by the Klan} has become an everyday thing," Holland said.

"But, believe me, people will listen when you tell them about black-on-white crime and how blacks are given unfair advantage under the civil rights laws passed by our traitorous Supreme Court."

Venable recommended that the Klan forget about rallies and parades "unless we can get thousands of people to turn out."

Many Klansmen disagree. Klanwatch observers said the Christian Knights of the Ku Klux Klan, based in North Carolina, staged dozens of small marches across the Carolinas and the Virginias this year.

"This is about the only southern Klan group that is maintaining a high profile at the moment," said Bill Stanton, who directed Klanwatch until leaving last month to write a book about the SPLC.

The Klan's hard times are glad tidings for Warren and Peggy Cokley of rural Tallapoosa, Ga.

Warren, who is black, and Peggy, who is white, were attacked in February 1983 by armed members of a western Georgia klavern who invaded their house and pistol-whipped Cokley, fracturing his skull. In 1984, the couple sued their assailants, two of whom have begun serving 40-year prison terms after conviction on federal civil rights charges.

Last October, the Cokleys were awarded $150,000 in damages in U.S. District Court.

"So far, we've received about $12,000 from the families of the men who attacked us," Cokley said recently. "They claim that's all the money they've got, but our attorney says he's going to take their homes if he has to. I don't like taking a man's home, but I believe those fellows should have to pay for what they did to us."