In January, the Committee on Historic Resources of the American Institute of Architects warned owners of old houses about the potential danger of installing insulation in the walls of frame buildings. With warm weather and the start of the home improvement season, that warning needs to be repeated.

The danger is from moisture. When warm air from the house passes through the insulation and hits the cold wall, drops of water condense on the wall. The moisture stays there. It upsets the chemical bond between the siding and the paint and the paint peels. As the weather becomes warmer, the microorganisms that cause rot thrive in the wet, moist wall.

It is possible to prevent his type of damage by making sure that there is a proper vapor barrier and adequate ventilation to the outside. The AIA recommends that you save the money, the worry-and the house-by not insulationg the walls.They advocate concentrating your home improvement dollars on cost-effective and nondestructive ways of saving energy.

So does Baird M. Smith, author of an Interior Department publication called "Conserving Energy in Historic Buildings." The place to start, according to Smith, is with a close look at your house and its heating/cooling system. Look for places and times to change the way you use the house that will result in energy savings. You can save money by closing off unused rooms, raising the thermostat in summer and lowering it in the winter.

Use windows, shutters and awnings. They let fresh air into the house to cool it. Set up and follow a preventive maintenance and cleaning schedule for the furnace and air conditioners. Many firms offer a complete check-up and warranty service on such systems. They are well worth the expense-particularly if the furnace stops on New Year's Day or the air conditioner dies on the Fourth of July. Window air conditioning units are a special conern. Drips and leaks waste money and can damage both exterior and interior walls.

When you have done these things, the next priority is to reduce the amount of air leaking out of the house. Caulk any cracks around windows and add weatherstripping to doors and windows. Joints tend to separate in old houses and you can lose expensively heated warm air through such cracks. Make sure that the color and texture of the caulking matches the original.

Insulate the attic space to keep heat from escaping through the roof. Make sure that there is adequate ventilation to prevent moisture buildup. The pockets of air insulation trap heat. Moisture in those pockets drastically reduces the effectiveness of the insulation and can set the stage for moisture damage. If your attic is unheated, put the insulation between the floor joists with the vapor barrier facing down. If there is flooring or the attic is heated, the insulation goes between the rafters with the vapor barrier facing in. Remember, the vapor barrier always faces the warm side.

Storm windows, on the outside, are a good way of cutting down a major source of heat loss. They should be tight-fitting and in good condition. Paint them to match the window trim. Shiny aluminum storm windows do not belong on a carefully rehabilitated 19th century house.

Avoid interior storm windows. While they can be as effective as the ones for the outside, they can damafe your window sills and sashes. They produce the same effect as the insulation does in the wall. The warm moist air hits the cold window and conenses. Paint peels, mold starts to grow, and you get to clean and repair damage that could have been prevented.

Insulate the basement or crawlspace, heating and cooling ducts, and hot water pipes. Remember the importance of the vapor barrier. In crawl spaces, the insulation goes between the first floor joists with the vapor barrier facing upward, again it is toward the warm side. In a finished basement, the insulation goes in the walls with the vapor barrier facing the warm room.

Smith also recommends using awnings, where appropriate, and shade trees. These measures are particulary valuable in areas where there is a heavy energy demand in the summer. Trees also provide a buffer against winter winds.

According to Smith these measures can reduce energy consumption and your utitity bills by as much as 30 to 50 percent.

"Conserving Energy in Historic Buildings" is one of a series published by the Office of Archaeology and Historic Preservation. It is available by writing the Technical Preservation Services Division, Office of Archaeology and Historic Preservation, Heritage Conservation and Recreation Service Department of the Interior, Washington 20240.