Urban encroachment in western Loudoun County, long the bucolic reserve of gentlemen farmers, could be slowed by clustering building developments, encouraging small-town revival and giving farmers economic incentives to continue farming, a report by the Conservation Foundation concludes.

About 70,000 acres of rich farmland in the entire county were converted to other uses between 1954 and 1974, the privately funded environmental research group noted. The study, conducted by land economists Robert Healy and James Short, used western Loudoun County as one of six case studies of the consumption of rural land by residential and commercial development.

Some western Loudoun residents are concerned about the 500-acre-per-year loss of farmland to development there, fearing that, like the more urban eastern half, their area will become criss-crossed with subdivisions and shopping centers.

Five years ago a group of environmentalists blocked the Lerner Corp.'s plan to build a shopping center at the corner of Rtes. 7 and 28 east of Leesburg. They now are preparing to do battle against a proposal to build a Sheraton motel near a historic 18th century mansion between Leesburg and Sterling.

Opponents of the Sheraton proposal cite Loudoun County planning goals, which would keep the Rte. 7 corridor free of further commercial development.

"We've got to find a way to have farms exist in the same county with urbanization and tourism," said B. Powell Harrison, president of the Piedmont Environmental Council, which has been active in fighting both the Lerner and the Sheraton projects.

"The United States of America is going to need every acre of good growing land it has, much sooner than people think, if it's going to feed its people," said Harrison, who has lived on a 60-acre cattle farm west of Leesburg since 1956.

Demand for land in western Loudoun surged in the 1970s, the Conservation Foundation report notes. Population in the area grew 21 percent between 1970 and 1977 and the mean size of individual land parcels dropped by more than a third between 1954 and 1976.

Meanwhile, the average price for an acre of farmland grew from $147 in 1950 to upwards of $4,000 an acre today, far more than could be justified by the land's productive potential, the economists said.

Zoning requirements, which have made it more difficult to divide land into small parcels, have encouraged 10-acre residential subdivisions, which as one farmer put it, "are too big to mow and too small to farm." Loudoun County planners estimate that 250 to 300 plots of land are carved out each year in the western area.

Since 1972, the county has given tax breaks to farmed land. But since tracts as small as five acres are eligible, some suggest that the policy has only encouraged the breaking up of land.

Planners predict no letup in the influx of city-dwellers into western Loudoun and expect that the completion of Rte. I-66 into the District will only encourage settlement.

Healy said the yen for the country hasn't decreased. "Suburbs are perceived as having many of the problems the inner city has," he said.

A New Yorker who recently moved with his family to the foot of the Blue Ridge hills in western Loudoun County agreed.

"I feel the suburbs have the disadvantages of both the city and the country and the advantages of neither," said Joe Maio, 40, an Internal Revenue Service program manager who three years ago built a house near the tiny town of Round Hill.

Maio spends three hours a day commuting to his $40,000-a-year job in the center of the District.

"I'll never ever move back into a suburb," Maio said, contending that life in the suburbs is only slightly less hectic than in the city and requires considerable travel time -- all without the scenery and privacy of Loudoun.

Many other rural Loudoun residents commute to the rapidly growing commercial area on the western fringe of the Washington suburbs, especially Tysons Corner in Fairfax County.

Also, western Loudoun's Middleburg area boasts a growing klatch of wealthy and famous folk. It hosted Ronald Reagan while he waited to move into the White House, and local residents occasionally rub shoulders at church with local homeowners Elizabeth Taylor and her husband, Sen. John Warner (R-Va.).

Foreign investors own 3.7 percent of Loudoun County; a Saudi Arabian prince bought the 2,000-acre Arthur Godfrey estate northwest of Leesburg in 1979.

Low commodity prices and high interest burdens make buying Loudoun County land for farming purposes impractical, says one Leesburg physician who earlier this year was forced to give up the sideline farming venture he began in 1977.

The doctor, 38-year-old Robert Johnston, now is renting out the 725 acres on which he attempted to raise livestock and crops. "With 20 percent interest rates, the whole idea of farming is unviable in a business sense," he said.

"I think that most people that buy farms out here are looking to break them up," Johnston said, adding, "The best prevention of farm subdivision is profitable farming, but this is not possible. . . ."Farmers say the prices make new farming ventures nearly impossible to afford.

Now that the average age of Loudoun farmers has reached 53, many farm owners are willing to sell their land and retire.

Rodger Anderson, 74, in 1978 subdivided his father's farm near the central village of Philomont and has sold all but two of the 15-acre, $38,000 lots.

"We decided to break it up and sell some of it so we'd get something out of it before we died," Anderson said.

Economist Healy said Loudoun County planners have one of the most advanced programs in the country, but planning commission members say they have much work to do to save rural land and still allow residential growth.

"The intent of our whole program, really, is to allow the change to take place slowly and productively," said county planner Milton Herd. "We want to discourage it, but on the other hand we can't stop it -- in Virginia especially."

Planners, complaining of a pro-development bent in Virginia courts, nonetheless are developing plans designed to achieve their goals of clustering growth, limiting expansion to small towns and prohibiting it in environmentally sensitive areas.

William Keefe, director of comprehensive planning for the county, said that his department will ask the Loudoun County Board of Supervisors to restrict public utilities to urban limits around selected cities and, in rural areas, to concentrate home construction in smaller lots and to locate those lots in nonagricultural areas.