The National Endowment for the Arts yesterday rejected applications for four controversial performance art grants in a move that distressed the arts community but offered comfort to endowment supporters on Capitol Hill.

In the midst of a charged political battle over the endowment's reauthorization, NEA Chairman John Frohnmayer has been under intense pressure to show that he is responsive to the endowment's critics. Several artists and representatives of arts groups who met with him in Seattle on Wednesday said the chairman had warned them he was likely to veto some grants for political reasons. He was unavailable for comment yesterday.

The works of the four artists whose applications were rejected deal with homosexuality, feminism, religion or other potentially controversial subjects. Those whose grants were turned down are Karen Finley, who appears partially nude and deals with feminist issues; Holly Hughes, who deals with lesbian issues in her work; John Fleck, who has performed nude and urinated on stage during one series of performances; and Tim Miller, whose work concerns homosexuality and AIDS.

Performance art is free-form theater that may draw on song, dance, film and storytelling, and often involves controversial or bizarre subject matter.

The NEA chairman usually approves the recommendations of the endowment's review panels. In March 1989 the endowment calculated that the chairman had reversed panel recommendations only 35 times in the previous seven years -- 0.1 percent of 33,700 grants.

The endowment released a statement yesterday noting that the NEA does not, as a matter of policy, comment on grants rejected in any category. In the statement, Frohnmayer said that he had approved 14 of 18 solo-performance grants recommended by an NEA review panel.

"Endowment grants go only to projects which meet high standards of professional and artistic quality," he said. He added that grants must also "encourage public understanding and appreciation of the arts."

Hughes, who had received NEA funding in the past, said she is convinced that her work was not rejected on artistic grounds. "My work is full of feminist satire and it's openly lesbian... . It's too funny for Jesse Helms," she said. She said the loss of the grant, which she expected to be from $5,000 to $10,000, will prevent her from developing new work and will single her out as a potential liability. "If a space wants to present me, they know that I'm a red-flag artist," she said.

Finley, whose work had been targeted by conservative columnists Rowland Evans and Robert Novak, said, "I am being punished because I am a morally concerned artist."

Fleck said his work has been misrepresented by NEA critics. "I feel as though I've been used as a scapegoat," he said.

Arts groups were likewise quick to protest, but the endowment's supporters in Congress on both sides of the aisle were not displeased by Frohnmayer's action.

"It will soothe some of the critics because they see finally some policy makers are making some decisions," said Rep. Tom Coleman (R-Mo.).

"It reflects the kind of sensitivity that members of Congress had been hoping for," said Rep. Paul Henry (R-Mich.), who has been a liaison with the administration on this issue.

Rep. Pat Williams (D-Mont.), chairman of the House subcommittee that handled NEA reauthorization, said Frohnmayer's action "probably helps us to avoid an amendment that would impose serious subject-matter restrictions on the NEA, so politically I think it's helpful. As a policy matter, the arts community is going to explode."

Rep. Dana Rohrabacher (R-Calif.), a leading NEA opponent, said the grant rejections will not appease critics because Frohnmayer was so obviously reluctant to act. "The fact that he's indicated that this was such a painful decision should suggest that this is being done under heavy political scrutiny," he said.

The National Campaign for Freedom of Expression, an artists group, said yesterday that it is working with the four rejected artists and a group of lawyers "to explore the legal ramifications of the endowment's actions."

Members of a panel that advises the endowment on its theater program policy issued a statement expressing "alarm and outrage" at the rejection of the grants. While technically within the NEA guidelines, the panel said, "these actions undermine the hundreds of hours of rigorous, painstaking review" by the NEA panel. The rejections "create a climate of fear for artists and audiences throughout America," the statement said. The 12-member policy panel includes Michael Kahn of the Shakespeare Theatre at the Folger and David Chambers of the Yale School of Drama.

In its statement, the endowment said a review panel had stood by the grants it initially recommended even though Frohnmayer asked the panel to reconsider in April. In May the NEA's advisory council deferred action on the grants, seeking further information. Frohnmayer provided additional information on June 20 and then polled council members.

The endowment said Frohnmayer acted in accordance with the council's recommendation. While many of the 26 council members did not respond to press inquiries about the decision, outspoken NEA critic Jacob Neusner said yesterday that 13 opposed funding for four or more grants and that some members apparently did not vote.

Renowned painter and council member Helen Frankenthaler said she opposed the grants on artistic grounds and lamented the appearance that the council is yielding to political pressure. "Unfortunately it falls into siding with the {government intervention} but that is not my reason" for voting against the grants in question, she said.

Last winter Frohnmayer withdrew a $20,000 grant for an exhibit on AIDS at New York's Artists Space because the exhibit and an essay in its catalogue by artist David Wojnarowicz were too "political." After arts groups protested, he reinstated the grant but excluded the catalogue from funding.