The housing subsidy-welfare reform brouhaha that splashed across newspaper front pages during the past two weeks was more damaging - and revealing - than the Carter administration prefers to admit publicly.

Although Health, Eduction and Welfare Secretary Joseph A. Califano Jr. conceded a symbolic victory of sorts to Housing and Urban Development Secretary Patricia Roberts Harris, the fight over housing inside the President's official family has only just begun.

It could, in fact, get much nastier in the months ahead.

The concept of "cashing out" the $5 billion a year the federal government currently spends on HUD housing subsidy programs by switching all or most of these subsidies to a reformed welfare system is a seductive one.

It lends itself to neat, clean conclusions that "equity will be served" by taking the money that the government now uses to assist 2.7 million low-and moderate-income families - subsidies that range from an average $1,300 to $4,200 per year household depending upon the program - and spreading it out among the larger population of about 10 million poor households.

It promises administrative "simplification" (fewer federal agencies and employees would be needed), a firmer hold on escalating budget costs (no foreclosed projects or tax shelter rip offs to contend with), and fewer black eyes for whomever is in office (no FHA scandals or high-rise public housing nightmares.)

It slides by the knotty, fundamental problem of housing supply - small cash payments to poor families do not get apartment buildings built, anywhere - with no real answers. And it never really explains how rent allowances distributed to everybody will not simply bid up the price of existing units, including the 5.4 million across the country that are substandard.

But it has undeniable appeal, particularly if you've decided that the share of the federal budget that goes for human resources programs must not be increased - the predicament that Harris and her agency find themselves in at the moment.

Arrayed against them in the coming contest for fiscal 1979's scarece budget dollars are:

The Officer of Management and Budget (OMB), whose career housing staff, led by William Hamm, has been waging guerilla warfare against HUD's subsidized programs since 1972. OMB successfully convinced the Nixon administration to clamp a moratorium on the programs in January, 1973. But it had a rough time during the Ford administration, when the Section 235 homeownership subsidy program was revived over its opposition, and the Section 8 rental assistance program began rolling.

OMB drafted the July welfare reform memo, using the identical arguments it provided for the Nixon administration's 1973 "Housing in the Seventies" report, which sought to justify the impoundments.

HEW, which has coveted HUD's housing billions as prospective new bureaucratic turf for years, under Republicans as well as Democrats. The key difference this year is that HEW's cheif is tougher, wilier, and better plugged in politically than his immediate predecessors. Califano fights hard in the clinches, and he has warned Harris publicly that round two on the housing issue at next month's budget review sessions.

Quite possibly the President himself. Carter makes no bones about his fiscal conservatism, or his commitment to holding federal domestic spending at or near it present levels. The OMB-HEW option plans on cashing out portions of HUD's housing subsidies were drafted with his approval. Carter told a questioner at the July 21 Yazoo City, Miss., town meeting questioner that the key programs will be retained, but his answer was fuzzy enough to fuel speculation that retaining them at their present funding levels.

On HUD's and Harris's side in the fight are members of the White House Domestic Policy staff, and a number of influential Democratic members of Congress. Their role could be highly important in conveying the political implications of a housing subsidy cutback to the President.

The welfare reform issue is by no means the only one that has put Harris's back to the wall, however, she has fought with OMB - and lost - over the need for additional funds for the multi-billion dollar "tandem" mortgage interests subsidy program that helps finance low-rent apartment projects.

She is currently is boxed in over the disposition of dozens of financially ailing, FHA-insured housing developments in cities across the country. OMB would lkie to foreclose many of them and get them off the federal books, rather than continuing to provide costly operating subsidies.

Harris, under pressure from civil rights leaders such as the Rev. Jesse Jackson of Chicago, is searching for ways to protect the buildings' tenants from precipitous rent increases or eviction, as well as to provide the project some long-term financial relief. But there is no way to do that without spending lots more money.

Perhaps the most revealing aspects of the whole subsidy debate now underway is that low-income housing may be in greater danger under Democrat Carter than it ever was under the Republican he defeated, Gerald Ford. The appointees who filled HUD eagerly in January - such as Under Secretary Jay Janis and Lawrence B. Simons, Assistant Secretary for Housing - talked confidently of an end to the days of Republican starvation of federal housing programs, an end to eight years of ignoring the 1968 national housing goals of 600,000 subsidized new units a year.

The same men are now looking ahead to 1979 and beyond, wondering how much of their fiscal 1978 level of subsidized housing - less than 350,000 units, new and existing - they can salvage.

They may do better than salvage what they've got. They may ultimately convince Carter to go beyond the 400,000 unit goal established by the Republicans.

But it will take a struggle - a fight that few of them ever imagined would be necessary.

Kenneth R. Harney is managing editor of Housing and Development Reporter, published here byBNA, Inc.