A conservative legal foundation yesterday filed a federal lawsuit challenging the city of Atlanta's policy of setting aside one-third of its contracts for minority and female-owned firms, jeopardizing an affirmative action program long hailed by minority business advocates as a national model.

The lawsuit, filed in Atlanta by the Southeastern Legal Foundation, calls the city's minority and female business enterprise program "illegal and unconstitutional" because it considers race and gender as factors in awarding contracts.

"We are filing the lawsuit because the city of Atlanta is breaking the law," said Matthew J. Glavin, president of the Atlanta-based foundation. "The city has a program that provides benefits to one group of people over another group of people because of the color of their skin, their ethnic heritage or their gender."

Atlanta Mayor Bill Campbell promised to vigorously defend the city's program in court, calling it fundamentally sound. "The program has strengthened our economy and helped remedy past and present discrimination," Campbell said in a statement.

The lawsuit against Atlanta is among dozens of similar cases filed across the country in recent years challenging government-run affirmative action programs that consider race and gender as factors. Many of the suits have proven successful and have resulted in governments either dismantling their programs or restructuring them so that they are based on class or geography rather than race or gender.

Many of the lawsuits have come in the wake of U.S. Supreme Court decisions allowing governments to use set-asides only after it is proven that there is ongoing discrimination against minorities and women. Even then, the court effectively has said that race- and gender-based programs should be implemented only after other remedies have been proven inadequate when it comes to correcting discrimination's lingering effects.

Minority business advocates consider the case filed against Atlanta's program to be particularly significant, because of a 24-year history that has made it a model for similar set-aside programs across the nation.

"Atlanta was really one of the first municipalities to take a strong stand on minority business participation," said Franklin M. Lee, chief counsel for the D.C.-based Minority Business Enterprise Legal Defense and Education Fund, which defends the legal rights of minority businesses. "They refused to engage in major projects without minority businesses playing a significant part."

Glavin, however, says that the time has passed for Atlanta's set-aside programs. Pointing out that Atlanta has had black mayors and a majority-black City Council since the 1970s, he said there is little chance that the city discriminates in awarding public contracts.

In the past, Glavin's group has aggressively challenged other race-conscious affirmative action programs, including those used by schools in Atlanta and Nashville. His group also fought the Census Bureau's plan to use statistical sampling, a method that advocates say would correct the traditional undercounts in minority communities. Also, the foundation has moved to have President Clinton disbarred as a lawyer, an action pending before the Arkansas Supreme Court.

The foundation notified Atlanta of its plans to challenge its program after a federal court in June struck down a similar set-aside program used by Fulton County, which includes parts of Atlanta. But rather than prompting the city to back down, the foundation's threatened suit ignited a series of bitter exchanges between Campbell and Glavin.

"We will vigorously defend this program with a team of the best lawyers and professionals available," Campbell said.