A township ordinance banning residential "for sale" signs prevents panic among homeowners, "white flight" and resegregation while advancing the desegregation goals in federal housing laws, a New Jersey attorney argued in the Supreme Court this week.

But his adversary told the justices that the ban violates the constitutional guarantee of free speech by imposing "complete and trial suppression of a message" that isn't false, deceptive or an advertisement for an illegal activity.

At issue is an ordinance adopted four years ago in the Township of Willingboro, a New Jersey community of 45,000 persons and 11,000 homes midway between Philadelphia and Trenton. Willingboro's lawyer, Myron H. Gottlieb, said the ordinance is "probably a model of compliance with the Fair Housing Act - perhaps the model."

Similar laws are on the books of communites including Baltimore, Oak Park, Ill., and Cleveland Heights, Ohio. Shaker Heights, Ohio, has had one since 1964.

The issue had divided some organizations that normally are allies, particularly the NAACP Legal Defense and Educational Fund and the American Civil Liberties Union.

In friend-of-the-court briefs, the NAACP unit praises the Willingboro ordinance as a means "to control incitement of racial fears and panic induced by realtors' use of 'for sale' and 'sold' signs." The ACLU attacks the ordinance, saying that the undocumented "vague fears of reactions of members of the community to the . . . signs cannot justify the suppression of information, commercial or not."

During an hour's argument Wednesday, the justices closely questioned Gottlieb and his adversary, John P. Hauch Jr., counsel for Linmark Associates, Inc., owner of a single-family dwelling in Willingboro, and William Mellman, a real estate broker. Hauch was seeking an over-turn of a lower-court decision holding the ordinance constitutional.

At one point, Justice Thurgood Marshall asked Gottlieb about his contention that an estimated 230 "for sale" signs constituted "a forest" that had caused panic and justified the ban.

After Gottlieb said that the signs, "ubiquitous" throughout the community, were enough to trigger fears in residents, Marshall said, "Since November, around this area, we've had a lot of signs up, too. We haven't panicked."

Spectators laughed, knowing the justice was referring to the turnover in Washington caused by the election.

Hauch said that the ban was "a totally illogical approach" to the stated goals of the community: preventing a "train of apprehension and fear" that could again rupture the township's pervasive peaceful integration and resegregate it.

Hauch also contented that there was no compelling government interest, such as public health, to justify suppression of the message that a house is for sale.

Gottlieb, however, argued that the message is owed a lesser degree of First Amendment protection than political or other speech, partly because it can be conveyed adequately, with no threat of inciting panic, in newspaper advertisements and in other ways.

He also charged that the signs have "a deceptive impact" because they are "a catalyst for a process of resegregation" that violates national housing policy.

Exchanges with Justices Lewis F. Powell Jr. and John Paul Stevens brought out that the numbers of homes known to have been put up for sale was about the same after the ban as before, and that property values had been increasing before the ban.