Dioxin -- the chemical that forced the evacuation of Love Canal, sparked a wave of lawsuits over Agent Orange and became notorious as the most potent carcinogen ever tested -- may be far less dangerous than previously imagined, according to new scientific evidence.

After close study of the chemical's effect and a reevaluation of the original scientific data on dioxin's alleged dangers, many scientists have sharply reduced their estimates of dioxin's cancer-causing potential. Calling it a weak carcinogen, some scientists now recommend relaxing guidelines for the handling and cleanup of the chemical.

The reevaluation is not complete, and in some cases is hotly disputed by environmentalists. Even those scientists leading the revision stress that dioxin is far from benign and should be handled with care.

But the new research sharply contradicts the arguments of many environmentalists that the levels of dioxin currently in the environment pose a significant health risk and suggests that at least some of the billions of dollars being spent to reduce trace amounts of dioxin in the air and water might be better spent elsewhere.

"I certainly wouldn't want to get more of this stuff into the environment," said Renata Kimbrough, toxicology and risk evaluation adviser in the Environmental Protection Agency administrator's office and one of a growing number of scientists inside and outside government pushing for more relaxed standards for dioxin. "But the present levels we're exposed to should not be of particular concern. We've overestimated the risk. . . . There are a lot of social ills in this country and we've got to concentrate on things that are really necessary."

The reevaluation of dioxin also calls into question some of the fundamental principles of risk assessment that have guided federal health policy on toxic chemicals for the past 20 years. If, as many experts argue, scientific advances have invalidated previous judgments about dioxin, it could mean that federal policy on a broad range of chemicals is also invalid.

"The stakes are enormous with dioxin," said Michael Gough, author of the 1986 study "Dioxin, Agent Orange" and a senior fellow at the Washington-based Resources for the Future. "If we change the way we regulate it, it will force an enormous change in the way we regulate all animal carcinogens."

The case against dioxin dates back to two large rodent studies conducted in the 1970s, both of which showed the chemical to be one of the most potent carcinogens ever measured in animals. Subsequent research on the chemical has led many scientists to believe that at higher doses dioxin can cause liver toxicity, immune system dysfunction and birth defects in humans and animals.

Dioxin is everywhere. It is a byproduct of incineration, wood and coal burning, paper-making and other industrial processes, and trace amounts of it are found in the air and water as well as in milk, orange juice, eggs, hamburger meat, hot dogs and chicken broth.

Of course, these amounts are extremely small. The average daily exposure for Americans, for example, has been estimated by some scientists to be 0.5 picograms per kilogram of body weight every day, which amounts to one-half of a millionth of a millionth of a gram. This is equivalent to about one 10-billionth the concentration of aspirin in a 150-pound person taking a standard tablet. But given dioxin's extraordinary toxicity, the question has logically been raised about whether that dose is safe.

The position of EPA is that it isn't. The agency's estimate of a safe daily dose of dioxin -- one that officials believe carries a cancer risk of less than one in a million -- is 0.006 picograms per kilogram, about 1 percent of the dose people actually receive. Although EPA officials stress that that figure represents only a starting point for policy-making, their risk assessment has added hundreds of millions of dollars to the costs of cleaning up contaminated sites, forced the pulp and paper industry into an expensive dioxin reduction program, and limited construction of toxic-waste incinerators.

"The only acceptable standard for dioxin is zero," said Mark Floegel, an official with Greenpeace, one of a number of environmental groups for whom dioxin has become a rallying cry. "We're devoting the same kind of resources to this issue as we do to whales or nuclear missiles."

But increasingly, scientists familiar with dioxin have become skeptical of the EPA's position and a number of other Western countries have radically reduced their estimates of dioxin's dangers.

Part of the reason is that repeated epidemiological studies involving people exposed to much higher than normal levels of dioxin -- most recently Vietnam veterans exposed to the defoliant Agent Orange, which contained dioxin -- have failed to show that dioxin has the same effect on humans as it does on laboratory animals.

Other scientists have begun to raise questions about the accuracy of the original rodent tests involving dioxin. This concern stems from the fact that in the 10 years since the original animal studies tested dioxin's carcinogenicity, the scientific standards for evaluating a chemical's potency have become much more precise and reliable.

Last year, Johns Hopkins University scientist Robert Squire -- who performed the original analysis of the animal data for the EPA a decade ago -- reexamined his findings. Based on the new criteria, his conclusion -- endorsed this spring by a panel of prominent pathologists -- was that as many as half of the lesions originally thought to be evidence of dioxin's carcinogenicity were actually benign.

While the original analysis showed dioxin to be dangerous in even the smallest amounts, the new assessment found that it caused no tumors except at the very highest dose level, making it only a weak carcinogen. Extrapolated to humans, this difference means the safe daily dose of dioxin could be increased as much as thirtyfold.

"Based on all of the biological evidence, I do not believe that dioxin poses a cancer risk to humans at any anticipated levels of exposure," Squire said in a letter to the EPA.

Perhaps the most serious reservation about the way the risks of dioxin have been evaluated, however, stems from the assumptions used by the EPA in translating its animal data on dioxin's risk to a policy governing human exposure.

The agency used its standard risk assessment model, which assumes that the amount of cancer caused by a chemical at high doses in an animal study is directly proportional to the risk of cancer from the much lower doses found in the real world.

In other words, if 50 out of 100 rats got cancer from eating a bowl of dioxin a day, the EPA assumes that at half a bowl a day, half as many would get cancer, and at one-quarter bowl one-quarter would get sick, and so on down to the point where at 0.006 picograms per kilogram per day the agency assumed that the cancer risk to humans would be somewhere around one in a million.

This risk assessment technique assumes that any dose -- no matter how small -- of a chemical carries some risk of causing cancer. Indeed, there is a class of chemicals known as mutagens that damage DNA directly and can trigger cancer-causing mutations in even the most minute quantities.

But dioxin is not a mutagen. It does not damage DNA directly. Rather it seems to work by triggering a significant -- but reversible -- change in the biological functions of cells. Many scientists believe that below a certain threshold level of exposure, dioxin is incapable of triggering that change.

What is that threshold? Using an alternative model for interpreting dioxin's risk, Canada, Australia and a number of countries in Europe have estimated that dioxin remains safe at doses from one to 10 picograms per kilogram per day -- a range several hundred times higher than the EPA estimate and comfortably above the levels to which Americans are currently exposed. This range also corresponds to safe limits for dioxin's other toxic effects, such as the potential for causing birth defects.

According to Dennis Paustenbach, vice president of McLaren Environmental Engineering in California and one of the country's foremost dioxin cleanup specialists, the United States could save upwards of $1 billion by moving to a standard of 5 picograms. Even a standard of one picogram "would eliminate 75 to 90 percent of the cost of cleanup" in sites where dioxin was the major chemical of concern.

Not everyone is convinced by this analysis.

"We know a lot about how dioxin acts, but we don't know everything," said Ellen Silbergeld, a toxicologist with the Environmental Defense Fund. Silbergeld and others recently opposed an attempt by the EPA to increase the acceptable daily dose for dioxin.

But enough experts have joined in the revisionist chorus that some scientists consider a softening in the government's stance toward the chemical inevitable.

"There is an awful lot of dioxin around," said Henry Pitot, a pathologist and dioxin expert at the McCardle Laboratory at the University of Wisconsin. "But the levels are so low that if this is a threshold carcinogen, then a good bit of our exposure is meaningless."