In the 1850s, the Washington and Old Dominion Railroad pushing westward to the Blue Ridge Mountains spurred growth at the market crossroads of Ashburn Village in eastern Loudoun County. Today, giant Xerox Corp. and the state-sponsored Center for Innovative Technology are the players destined to shape this farming community's future.

Poised midway between these engines for economic growth, Ashburn's white-painted Victorian homes, where swing seats hang on the wide porches, and its rusted feed and fertilizer warehouses lining the former railroad tracks will be circled by new development in the next decade.

Xerox last week unveiled plans to construct 20 corporate headquarters buildings, 1,800 executive-style homes and two hotels on 2,267 acres about five miles north of Ashburn. The Xerox site is north of Route 7 just outside of Leesburg.

The same week, a consortium of 13 Fortune 500 businesses announced plans to construct a research center at the CIT about the same distance due east of Ashburn. This news also served to dispel fears that state officials, frustrated with the slow progress in getting landowners to donate property for the CIT, would look elsewhere for a site. The CIT will straddle the Fairfax-Loudoun border near the junction of the Dulles Toll Road and Route 28 close to Washington-Dulles International Airport.

Just as a village held a commanding position at the junction of three roads and a railroad in the heart of the rolling agricultural farmlands of eastern Loudoun in the 19th century, its promixity to future employment centers is crucial today.

Change is coming quickly to Ashburn, partly because the surrounding tracts of land have been held by a handful of large landowners, namely Warren K. Montourri, a land speculator; Marcus J. Bles, now in his 80s, who made a fortune in the 1960s by selling land he accumulated at Tysons Corner; and Virginia Beef Inc., an agricultural corporation. As these landowners sell, development is taking off.

The rezoning applications filed in 1983 presaged the rich potential developers saw for the Ashburn area until Xerox and the CIT plans were in hand. Many residents were skeptical that Ashburn could absorb such growth, said Loudoun County's planning director, Frederick P. D. Carr.

"With the CIT and Xerox announcements, it's like throwing a large rock into the lake. The demand circles outward," Carr said.

Developers, of course, are ready to meet the demand. Already the county has before it plans for a 5,461-home development called Ashburn Village I and II on 1,580 acres of land that arcs around the eastern edges of today's rural community.

The county planning commission had been expected to make a recommendation on the project this week, but put it off until next month to leave more time for citizen comments.

Ashburn I and II would be the largest development Loudoun has seen since U.S. Steel Corp. made Sterling Park the outer reaches of surburbia in the early 1960s. Plans call for 40 to 60 percent of the new development's residential units to be town houses and multifamily units. This mix should provide a complement to the prestigious executive-style mansions planned for the Xerox property.

Developer Alan I. Kay of Rozansky and Kay Construction Co. of Bethesda also plans 3 million square feet of industrial and office space at Ashburn Village I and II. Carr said that subcontractors who are bound to cluster around the Xerox development and the CIT probably will snap up that space. Kay is in a position to gauge the demand that the CIT will create: He is one of its benefactors. Along with Jordanian businessman Samir Kawar, Kay is donating 35 acres to Virginia for the CIT site.

The mix of residential, commerical and industrial development that Kay is proposing for the Ashburn I and II development fits in well with the county's long-range plans for the area. "We see this as the breadbasket of Loudoun County," Carr said.

A citizens committee report yet to be adopted by the board of supervisors allocates about two-thirds of the Ashburn area for employment. Approximately 10,000 square feet in the 34-square-mile area northwest of Dulles Airport to Route 659 and south of Route 7 that was studied by the citizens committee is zoned for commercial and industrial use, Carr said.

Magnavox is constructing a 194,000-square-foot assembly plant on 76 acres facing Route 7 at its junction with Route 641. Next door, Evans Co. plans to construct a 275-acre office park called Intertech, a home for software companies.

Encouraging this economic growth is part of Loudoun County's policy of trying to balance its tax revenue between the burgeoning residential sector and the business community. Business and industry contributed 16.4 percent of the county's $2 billion tax base last year. The county aims by 1990 to increase that share to 25 percent but an analyst in the economic development office, Rosalyn Willis, said it will be an uphill struggle. Residential construction currently is growing at a rate of 17 percent a year.

"We will certainly hold our own with economic development but expect it will be four to five years before residential growth peaks," Willis said. Although the Xerox proposal will boost employment prospects in the county, its benefits won't be felt for a number of years because the development won't be completed before 1990, she added.

The upward creep of the county's real estate tax illustrates the need for more industrial and commerical development. The proposed budget calls for the real estate tax rate to rise from its current $1.10 per $100 of assessed value to $1.19 for the next fiscal year