The West's regional basketball team smothered the South, 109-97, tonight to capture the gold medal at the National Sports Festival.

Earlier in the day, the Washington-area dominated East team, coached by Georgetown's John Thompson, lost the game for the bronze medal, 93-92, to the Midwest team that it had beaten the the opening round.

Paced by UCLA recruits Stuart Gray, a 7-foot center, and guard Ralph Jackson, the West dominated play in the final game and opened a commanding fourth-quarter lead to seal the victory.

Gray scored 22 points, Jackson 18. The West was undefeated in three previous festival games.

The contest was the second meeting between the two teams. On Saturday the West defeated the South, 98-94, in the opening round of play.

Gray was named the tournament's most valuable player and Jackson was named to the all-tournament team, as was the University of the District of Columbia's Earl Jones.

Jones, who scored on eight of 12 field-goal attempts and had 17 points, was ejected from the consolation game with 10 1/2 minutes left to play for what referee Roger McCann called a "flagrant elbow" against the Midwest's Ben Power, bound for Michigan State.

Chris Mullin of St. John's, who led the East in scoring with 20 points, cut the Midwest's margin to one point with a basket with six seconds remaining, but the East was unable to score again.

Regarded by many as the team to beat for the gold medal, the East, coached by John Thompson, Georgetown basketball coach, beat the Midwest, 96-80, in the opening round of competition for its only victory.

In ice hockey, the gold medal went to the Great Lakes team after Jay Wall's goal midway through the second period broke a 1-1 tie and the undefeated team went on to defeat Central, 5-2.

Rob Carpenter, the Washington Capitals' first-round draft choice, scored the first two goals in New England's 10-0 route of the Midwest, good for a bronze medal.

The final basketball and hockey games marked the end of six days of National Sports Festival competition.

The festival attracted more than 2,600 athletes, most of them potential Olympians in 33 sports ranging from baseball, basketball and hockey to archery, kayaking and equestrian events.

It also drew dozens of professional scouts and more than 200,000 spectators over the six days. One television network sent more than 150 staffers and special correspondents and scheduled more than six hours of air time over two weekends for coverage of the events. Athletes such as gymnast Kurt Thomas and former Olympic skaters Peggy Fleming and Eric Heiden were signed as special commentators for their sports.

While the World University Games in Romania and other summer sports events in Europe kept many of the nation's premier athletes away from the festival, the festival undoubtedly attracted many of the stars of the future.

Among those considered to be likely candidates for future Olympic stardom is 17-year-old Kim Gallagher, a high school senior from Upper Darby, Pa., who was an easy winner of the women's 3,000-meter run.

Others, such as sprinter Herschel Walker, who is also in all-America running back from the University of Georgia, Carpenter and several of the basketball players will likely never make it to the Olympics, opting instead for the chance to earn big money in professional sports.

Dave Gavitt, chairman of the U.S. Olympic Basketball Selection Committee, defended the United States Olympic Committee (USOC) policy of welcoming professional scouts to the festival.

"It brings the better athletes here," Gavitt said.

While the festival is admittedly geared toward young athletes, it also drew a smattering of middle-aged and older competitors. Four-time Olympic gold medalist Al Oerter, trying to regain Olympic status at the age of 44, won the bronze medal in the discus and Oswald K. (o.k.) Smathers, 66, a retired electrician from Brevard, N.C., competed in archery.

"At my age, what else can I compete in?" said Smathers, who won a world's championship in archery in Prague in 1957, and now has two artificial knees, the result of arthritis and injuries suffered in an automobile accident in 1961.

Two competitors shot put gold medalist Brian Oldfield and pole vaulter Steve Smith, were admitted by court order over the objections of the USOC.

Both are former professionals who say they have reverted to amateur status, and they have been cleared for competition by the International Amateur Athletics Federation, the governing body for amateur sports.

But the USOC denied them entry to the sports festival, fearing their admission would cause complications with the International Olympic Committee, whose eligibility criteria differ from those of the IAAF.

In men's gymnastics, Mark Caso, paralyzed from the neck down in a fall during a training session at UCLA 18 months ago, came back to win five medals. Caso won a gold medal in the still rings and bronze medals in the vault, parallel bars and horizontal bar. Ron Galimore, 22, of Tallahassee, Fla., scored a 10 in the vaulting event in that competition.

Scott Hamilton, the U.S. and world figure skating champion, won a gold medal in that event before a capacity crowd of 6,695 at the Onondage County war memorial rink. "This was the best performance of my life," Hamilton said.

Gloria Bogacki of Park Ridge, Ill., and Steve Merrifield of Canoga Park, Calif., swept the gold medals in the speedskating. Bogacki won the 1,000-meter race and anchored the winning 3,000-meter relay team, which also included Lisa Parfitt, Ann Klopp and Beth Nowell.

On Tuesday, Bogacki won the 500 and 1,500 events. Her sweep was a repeat of her performance in the 1979 festival.

In equestrian events, Doug Russell of Middleburg, Va., won a bronze medal in the individual jumping competition, riding Cat Sass.