Hundreds of Bethesda residents living near a planned extension of Woodmont Avenue have intensified their fight against the controversial proposal as the Montgomery County Council nears a deadline to decide whether to allocate additional funding for the project.

The dispute centers on a proposed $2.5 million extension of Woodmont, from Bethesda Avenue to Leland Street, the fourth and final block that the county wants to extend Woodmont. Officials said the extension is needed to improve the flow of traffic within the blocks surrounding Bethesda's business district.

While favoring extending Woodmont three blocks from Montgomery Lane to Bethesda Avenue, residents argue that the final block proposed for extension would bring Woodmont out of Bethesda's commercial section and into their residential neighborhoods.

An extension from Bethesda Avenue to Leland Street "will bring thousands of cars, many buses and commercial vehicles a day through the now quiet, clean residential streets of Leland and nearby Hillandale Road," predicted Georgia Holliday, a resident of nearby Strathmore Avenue who has helped organize opposition to the plan.

Opponents also voiced concerns that the extension would result in the demolition of four private houses on Leland, would lower property values, and would inevitably encourage commercial development, threatening the loss of the neighborhoods' moderately priced apartments and single-family houses.

The battle over the extension has come to a head as the county council must decide by May 15 whether to approve up to $3.7 million in the proposed $1 billion, six-year capital improvements budget for fiscal 1986 so that the project and right-of-way acquisitions can proceed.

The project's total cost is estimated at $9.6 million. Of that, more than half has been appropriated.

The Woodmont extension has been the object of intense debate between county officials and nearby residents since 1972. At that time, the sector plan for the Bethesda Central Business District called for Woodmont Avenue to be extended from Old Georgetown Road south to Bradley Boulevard, providing a one-way bypass of Wisconsin Avenue.

That idea was dropped in 1976, and later versions of the plan proposed extending Woodmont at least to Montgomery Lane to provide access to proposed new development and internal traffic flow within the business district. That section already has been constructed.

The fate of Woodmont south of Montgomery Lane has been debated considerably over the last few years, and in the early 1980s, when the area's sector plan was amended, county planners proposed extending Woodmont to Leland.

Pat Willard, a highway coordinator with the Maryland-National Capital Park and Planning Commission, said this week that the Leland connection was proposed because county planners had predicted that the residential units along Strathmore Road, which lies between Leland and Bradley Boulevard, eventually would be replaced with more intense housing developments.

While the change never occurred, the plan to extend Woodmont to Leland is still on. However, in a move designed to protect Strathmore from through traffic, planners have proposed blocking Woodmont traffic from crossing Leland and entering Strathmore, Willard said.

Residents of the Kenwood Forest II community and others living within a triangular-shaped neighborhood bordered by Leland, Strathmore and Bradley Boulevard argue that that one additional block would do nothing to improve traffic. By terminating Woodmont at Bethesda Avenue, they said, traffic still could be routed to either Wisconsin or nearby Arlington Boulevard.

"We can see no logical reason to spend additional funds to push a road project one more block, and jeopardize a long-established residential area," said William A. Shade, a Leland Street resident.

The Citizens Coordinating Committee on Friendship Heights, a group composed of 14 area civic associations and the town of Somerset, also is against extending Woodmont to Leland, echoing opponents' concerns.