Shortly after Housing and Urban Development Secretary Jack Kemp embarked on an ambitious plan to fix a host of ailing entitlement and subsidy programs last fall, the former congressman and Republican presidential candidate got his first inkling that his protracted honeymoon might finally be over.

The popular Community Development Block Grant program, he had decided, was a perfect example of a well-intentioned program that was not properly serving the poor. Block grants were paying for swimming pools and horse barns instead of inner-city needs, he said, and HUD wanted to require grant recipients to target three-quarters of the money they received to demonstrably poor areas.

But in making what many saw as a clumsy attempt to inject conservative social policy into a popular program that had funneled billions of dollars to cities and towns, Kemp failed to anticipate the protest he would encounter from local officials across the country.

In a sharply worded letter to HUD, a group of state and local officials scolded Kemp, saying he should "resist the temptation to propose sweeping legislative changes based on anecdotes." A local official from Florida, in a separate letter sent to a member of Congress, labeled the plan a "blatant politicization of poverty."

For the ebullient former football star, such harsh criticism was a decided change.

Kemp's appointment to the Cabinet was greeted with enthusiasm, even by liberals. His initial appearances on Capitol Hill were warmly received by members of Congress he has known for years who rarely, if ever, had seen his predecessor, Samuel R. Pierce Jr. He befriended other potential critics by touring homeless shelters with representatives of the National Coalition on the Homeless.

"When Jack Kemp came in with new people it was really a breath of fresh air," said Kent Colton, the executive vice president of the National Association of Home Builders.

The HUD scandals that erupted last spring, exposing years of mismanagement at the department, left Kemp unscathed and in fact presented him with an unexpected benefit -- a congressional mandate to retool the department as he saw fit. For Kemp, one of the few real ideologues in the Bush Cabinet, it was an opportunity to win support for programs he had long championed, without the kind of criticism that Pierce encountered when he tried to eliminate or reduce the same programs.

But with some of the focus moving from HUD's past to its future, Kemp faces the difficult task of proving that with little new money and a crippled bureaucracy, he can refocus U.S. housing policy, quell pent-up demand for cheaper housing, revitalize urban areas and reduce homelessness.

Kemp calls it his conservative's war on poverty, in which the battles will be fought not with money but with programs like Operation Bootstrap, which links job training for residents on welfare to the award of public housing vouchers.

But the programs Kemp is talking about do not sound so different from Reagan-era policy. The HUD 1991 budget proposal, for instance, reads in most cases like a revamped presentation of ideas advanced unsuccessfully by Pierce, including proposals to replace new housing construction with housing vouchers and turning over public housing units to tenants for management and purchase.

The National Low Income Housing Coalition called the HUD budget "long on hype but short on funding." And there are other signs that the HUD secretary is no longer getting the benefit of the doubt.

"Kemp gives a wonderfully euphoric speech, but when the rubber hits the road, the money's not going to be there," one lobbyist said.

Housing advocates are beginning to chafe at what they see as a lack of new money and a growing reliance on matching grants and private support of existing housing. "We're starting to get a bit disillusioned," one private industry housing official said. "We're finding they like to lecture more than they like to listen."

Muted criticism of Kemp's legislative initiatives is now also heard in Congress. Rep. Charles E. Schumer (D-N.Y.) charged recently that Kemp's HOPE proposal, a $1.2 billion package of grants and incentives that is the main component of the proposed HUD budget, falls short of meeting the nation's need for affordable housing.

HOPE -- for Housing Oportunities for People Everywhere -- would provide grants for public housing homeownership, the creation of housing opportunity zones and allot tax credits to encourage development in depressed areas and middle-income homeownership.

But, Schumer said, "There is nothing in HOPE . . .that will actually build more housing."

Barry Zigas, director of the Low Income Housing Coalition, gives Kemp credit for at least focusing on housing issues. "But if this set of HOPE proposals is all there is, we're going to be very disappointed," he added. "There is very little in the way of new resources."

HUD's new budget asks Congress for $23.7 billion for the 1991 fiscal year. It seems like an increase but actually counts money that was appropriated in previous years, disguises millions of dollars that have been shifted from one program to another and includes the controversial block grant targeting provisions that Congress rejected when they were presented as part of a package of management reforms last year.

Kemp, whose fondness for hyperbole, long-winded oration and desk-pounding enthusiasm is well-known, has amused many HUD-watchers by often lumping fiscal, foreign and domestic policy issues into a single speech -- occasionally in one sentence.

"He's so diffuse in his interests," said one public housing official. "One minute you're talking about Kenilworth-Parkside {a public housing project in northeast Washington}. The next minute, you're talking about Japan and China."

Within HUD and elsewhere, there is an ongoing debate about the federal government's proper role in providing low-cost housing. Kemp's philosophy would shift more of the responsibility for enhancing the nation's housing stock to local and state governments and to the private and nonprofit sectors.

"I think that's been one of the more interesting and volatile areas of discussion we've engaged in," said Kenneth J. Blackwell, a former mayor of Cincinnati who is Kemp's deputy undersecretary for intergovernmental affairs. "Since 1966 there has been some ambiguity surrounding the question: Who does HUD serve?"

Carrying out Kemp's conservative agenda is a cadre of aides often described as bright, ambitious and eager, but almost entirely lacking in housing experience.

Along with longtime Kemp congressional aides Mary Brunette and Thomas Humbert and recent recruits such as Blackwell, general counsel Francis A. Keating II, assistant secretaries C. Austin Fitts and Anna Kondratas, public affairs liaison Sherrie Rollins and Undersecretary Alfred A. DelliBovi, Kemp has assembled an inner circle of advisers who subscribe to his notions of a conservative social policy.

It is this policy, Kemp frequently says, that holds the best hope for the future of the Republican party.

"My approach to this administration is to say, look, the greatest political potential this president, our party, the administration has ever had since 1864 on Lincoln's reelection, is in the cities, among people who have never thought that anybody cared about them other than New Deal Democrats," Kemp said in an interview. "And you have a chance to split the New Deal coalition by showing compassion, care, interest, involvement, money, incentive, empowerment, whatever."

The debate over the best way to achieve Kemp's ideological goals has occasionally evolved into internal conflict among his top aides. DelliBovi, for instance, has acquired a reputation as Kemp's "bad cop," the man within the department who has been charged with angering traditional constituency groups and annoying others in order to force a point home.

When several field office managers were recently reassigned, for instance, they heard it from DelliBovi. During a WETA-TV program on housing last year, it was DelliBovi who launched an attack on the District government so harsh that it made other participants -- including D.C. council member Charlene Drew Jarvis and Maryland developer James W. Rouse -- visibly nervous.

The HUD lobbyists expect too much, DelliBovi said. "Their idea of building bridges is getting the department to do it their way."

Fitts and Blackwell have quietly disagreed with DelliBovi, especially on the question of how HUD interest groups should be treated.

A Fitts-Blackwell memo to Kemp, written in August, argued that groups such as mayors, home builders and mortgage bankers can be "valuable allies" in achieving Kemp's aims. DelliBovi, however, writing subsequently to Kemp, called these traditional HUD constituents "lobbyists for the welfare state" who "need to be educated."

While Kemp woos housing advocates and takes the high-profile trips around the country promoting his social vision, his aides have been saddled with the day-to-day obstacles of managing a department that is still unable to perform tasks as fundamental as auditing its books.

"I was shocked at the degree of managerial incoherence at HUD," said Kondratas, the assistant secretary for community planning and development, who concedes that HUD officials have been all but overwhelmed by a year of scandal.

Fitts, an unconventional Wharton School graduate and Manhattan investment banker who had worked for the Bush campaign in New York (but also contributed $500 to New Yorkers for Jesse Jackson in 1988), said she has been spending 90 percent of her time untangling the bureaucracy that governs the department's housing programs.

Keating, who served as associate attorney general under Edwin Meese 3rd, devised the legal strategy required to kick suspected drug users and dealers out of subsidized housing -- a step that received wide publicty last spring.

"I don't think we're out of the woods by any means," Keating said of the continuing tangle at HUD. "I think we're still in a crisis mode."

Compared to Pierce, Kemp still enjoys considerable enthusiasm among HUD-watchers, who appear willing to give him a chance to get the department in order. "It takes a long time to turn around the Titanic," said F. Barton Harvey III, the deputy chairman of the Columbia, Md.-based Enterprise Foundation.

But the block grant controversy suggests there may be trouble if Kemp continues to try to turn his conservative agenda into action. Blackwell, for instance, concedes that the department should have "reached a compromise instead of having played out a gunfight at the OK Corral on the Hill."

And no one says that the problems that beset HUD are over.

"All of us have to make sure that, as we're thundering and rolling, that we don't go over a cliff," Keating said.