Sen. Paul Simon of Illinois, beset by progressively worse showings in the Democratic presidential race, announced yesterday he will not actively compete in the March 8 "Super Tuesday" states and instead will concentrate immediately on his home state primary on March 15 and northern industrial states that follow.

"We do not have the resources for winning in the Super Tuesday states," Simon said.

But the Illinois Democrat, envisioning a brokered convention in Atlanta in July, said he has no intention of dropping out of the race despite finishing second in Iowa, third in New Hampshire and then, on Tuesday, third in Minnesota and fourth in South Dakota. He said he will remain an active candidate throughout the primary season, winding up with the California and New Jersey primaries on June 7.

"Super Tuesday is likely to result in a very mixed picture," he said. "There is growing evidence that for the first time in recent history, there will be no first ballot winner at the Democratic convention. It's on to Atlanta."

Simon's campaign reportedly owes about $500,000, but his aides say that he has raised nearly that much in the past two weeks and that he is due federal matching funds.

"We have had a record-breaking fund-raising," Simon said. "On Monday, $137,000 came in, but you look at what it would cost for a media buy in 20 states and you're talking about something that is nowhere near adequate."

Simon also denied that he is writing off the South. He said that he will be in Atlanta for the Jefferson-Jackson Day dinner and the Atlanta Constitution debate this weekend and in Williamsburg, Va., for the Democratic Leadership Conference debate on Monday.

"It's not regionalism, it's resources," he said. "If there were just one or two primaries there and I could give them personal attention, then I'd do it."

In justifying continuing his long-shot campaign, Simon pointed out that he is second among the Democrats in elected delegates and that he finished ahead of Rep. Richard A. Gephardt (D-Mo.) in Minnesota "despite not a single dollar spent on buying television time."

However, home-state political considerations clearly played a major role. His delegate slates in the Illinois primary include allies of most of the big names in Democratic politics there, including Attorney General Neal Hartigan and House Speaker Michael Madigan.

They and Illinois Democratic Chairman Vincent Demuzio were reportedly insistent that Simon stay in the race to give them a chance to get to the convention and have a decision-making role with the 173-member delegation.

But it may be chancy. In 1976, when the late Mayor Richard J. Daley ran organization slates backing then-Sen. Adlai E. Stevenson III as an Illinois favorite son, he kept other candidates from challenging them in Cook County (Chicago). Outside Cook County, however, the organization slates were swamped by political unknowns supporting Jimmy Carter, the winner of the separate "beauty contest" poll.

Some supporters of Jesse L. Jackson criticized Simon last week when rumors circulated that he might withdraw and endorse Massachusetts Gov. Michael S. Dukakis. Yesterday, fresh criticism arose that by staying in the race, Simon hurts Jackson's chances of expanding beyond his black voter base.

A Simon strategist also said Simon "is risking a great deal" by his decision if he winds up running for a second term in 1990, when he can expect strong opposition.