Peace Corps Director Paul D. Coverdell's efforts to make the corps "a vibrant, vital part of U.S. foreign policy" have upset traditionalists who say he is distorting the agency's image as a largely nonpolitical, person-to-person effort to help the Third World.

The controversy grows out of Coverdell's changes in the Peace Corps' priorities as documented in a recent report by the corps' inspector general, Gerard A. Roy. The report said the agency is cutting back on aid to its former clients in the Third World and diverting those resources chiefly to Eastern Europe. Roy's report says that partly because of this, the corps is showing "evidence of strain, confusion and chaos."

Coverdell's Peace Corps continues to assist the poor in Third World nations. But the 30-year-old agency also has begun expanding in other ways, sending English teachers to formerly communist nations in Eastern Europe and placing new emphasis on teaching American schoolchildren about other countries.

The traditionalists are particularly troubled by Coverdell's remarks that President Bush is "making {the Peace Corps} very much a part of his administration" and its foreign policy.

"Sending some volunteers into Eastern Europe is okay," said Philip Liston, president of the board of the Northern California Council of Peace Corps Volunteers. "But {look at} what's happening to Africa and Latin America."

Roy's report to Congress in November noted that some Third World programs have been cut to fund new projects in Eastern Europe, where the agency expects this year to have more than 400 volunteers, nearly three-fourths of them teaching English. Poland alone is to get 213 volunteers, which will make it one of the five largest country programs.

"Limited resources {for} existing countries" must not be "redirected to support new country entries," Roy warned in his report. He added that he found "evidence of strain, confusion and chaos" as the agency has tried to respond to Coverdell's push for new overseas and domestic programs.

Attempts to define what the Peace Corps is and what it represents have generated disputes for years. The 1961 legislation establishing the Peace Corps listed three broad goals: "To provide skilled manpower to nations seeking assistance; to help people in other nations learn about Americans" and "to help Americans learn about people of other nations."

But these guidelines have left much room for disagreement. Karen Schwarz, a journalist who has written a book on the Peace Corps, summed up the arguments: "What is the Peace Corps supposed to do? Teach English to well-fed Czech teenagers or show mothers {in underdeveloped countries} better nutrition practices for babies who wouldn't live past their first birthday?"

Coverdell, 51, a Republican former Georgia state senator who in 1988 headed the southern steering committee for Bush's campaign, bridles at allegations he is transforming the agency into an administration foreign policy tool by promoting rapid expansion into Eastern Europe. He pointed out that Sargent Shriver, the agency's first director, has backed that expansion. Shriver, in congressional testimony earlier last year, called for 10,000 Americans to be sent to the Soviet Union and Europe.

"This is not your father's Peace Corps," Coverdell says in speeches, borrowing from an Oldsmobile ad. "It is a new generation of Peace Corps."

Coverdell also pointed out that foreign policy considerations have always affected Peace Corps assignments, citing the large number of volunteers sent to Central America and the Caribbean in the 1980s.

"Don't throw foreign policy at me," Coverdell said in a recent interview, adding that "we're just responding" to requests from various countries.

Some countries may face reduced levels of volunteers, he acknowledged, but other, equally needy Third World countries are receiving increases as the agency expands quickly from 73 countries served to about 90 by the end of 1991.

Volunteers will arrive this year in Laos and Mongolia, the first Marxist-ruled nations to accept the Peace Corps, and talks are underway with China, Mozambique and Yugoslavia. Discussions continue on resuming the Philippines program.

The rapid move to former communist satellites serves to make the agency more relevant, and that helps attract new volunteers to the Peace Corps, Coverdell asserted.

"As the keeper of this legacy, I have the responsibility to generate enthusiasm about it," he said. "And enthusiasm is related to relevancy to one's own time. . . . Eastern Europe is a contributor because the activity there has caused new audiences to remember what Peace Corps can do, and has been a principal factor in generating the resources that, yes, get us to those four countries {in Eastern Europe}, but allow us to get to 26 others," including Haiti and Bolivia. "I just got tired of saying 'No' to every new request."

A dispute -- seemingly minor but a reflection of the deeper ideological battle -- arose earlier last year when Coverdell ordered new stationery that changed the letterhead from Peace Corps to United States Peace Corps. He also put that name on a sign on the headquarters building.

Coverdell insisted the change was appropriate, saying he saw no reason "to hide the name of the country" that sponsors the Peace Corps. But pressure from Congress, including a threat to cut off funds for new stationery, caused Coverdell to reconsider slightly. The new sign has remained, but new stationery will say Peace Corps of the United States.

Some observers, even those supportive of Coverdell's efforts, worry that the agency may be expanding too rapidly and at too great a cost for traditional programs. A battle erupted last summer, for instance, over Coverdell's efforts to cut funds for women's development, agriculture and fisheries projects, while instituting domestic programs such as teaching fellowships for returned volunteers and a "pen pal" program between volunteers and public schools.

The Senate Appropriations Committee, in its report in October, praised some of Coverdell's domestic efforts and approved an 11 percent budget increase, but added, "the committee is deeply concerned by reorganization schemes at the Peace Corps" that have reduced funding for traditional programs. The report said the moves "have created significant suspicion and concern among both Peace Corps employees and returned Peace Corps volunteers."

In his study too, inspector general Roy found that the agency's "unprecedented growth . . . is beginning to strain the very fabric of the Peace Corps."

In a written reponse to Roy's findings, Coverdell said a new budget system started in January "closely monitors that growth, thus ensuring that we do not over-commit our resources."

Coverdell has no doubts that he is interpreting the true mission of the Peace Corps. "I would argue that if John Kennedy were alive today, that he would be absolutely comfortable with what we're doing," he said.

Lately, though, the debate has developed more personal overtones. Staff members and former volunteers accuse the energetic Coverdell, who ran an insurance marketing firm and the Republican Party in Georgia, of using the Peace Corps to promote himself politically: either to a Cabinet position, a 1992 challenge to Sen. Wyche Fowler Jr. (D-Ga.), or other office in Georgia.

Liston, echoing concerns expressed by more than a dozen former volunteers and staff members, said Coverdell "doesn't care about Peace Corps. It's just a steppingstone." Critics point to Coverdell's frequent trips to Georgia and a list of Georgia news media the Peace Corps keeps for press releases on Coverdell's activities.

Coverdell also has been criticized by some for filling headquarters staff positions not with former field volunteers, as his predecessors did, but with people who have ties to Georgia, the Republican Party or the White House. Even the job of liaison with returned volunteers has been given to a woman from Georgia who was never a volunteer.

Coverdell said "talent is the issue" in hiring decisions, not whether someone was a former volunteer. In any case, of the 15 senior positions on his staff, six have been filled by former volunteers or former Peace Corps staff, he said, adding that "there is no shortage of {returned volunteer} views in this building or in my staff." Before being appointed to the Peace Corps, Coverdell's own overseas experience was limited to a stint with the Army in the Pacific.

Coverdell said much of the criticism has been a reaction to his efforts to reorganize the agency. When he took command of the Peace Corps in 1989, it was down to 5,100 volunteers from a peak in 1966 of 15,556, and there was congressional criticism that the agency was not doing enough to educate Americans about other countries.

Coverdell and his detractors agree that some of the criticism stems from the contrast between his style and that of his predecessor: Loret Miller Ruppe, the outgoing, dynamic director during the Reagan administration. Ruppe would spend hours chatting with volunteers overseas, with returned volunteer groups here and with the headquarters staff as part of an enlarged family.

Coverdell, on the other hand, is "an extraordinary introvert, off the charts," said a former senior agency official who worked closely with him. "Loret was a schmoozer. Paul is not."