The streaking Washington Bullets played their best defense of the season yesterday and moved past the New York Knicks into third place in the Atlantic Division by beating the Atlanta Hawks, 96-78, at Capital Centre.

A crowd of 5,521 saw the Bullets hold Atlanta to its fewest points this season. And the Hawks' 78 points are the fewest the Bullets have yielded in a game this season.

The Bullets, now 18-19, are closer to .500 than anytime since the third game of last season. They have won three straight and five of their last six, and have the fourth-best record in the NBA's Eastern Conference.

The Hawks, after winning seven of their last nine, shot only 37 percent from the field. Their two leading scorers this year, John Drew and Dan Roundfield--both averaging more than 18 points a game--scored 13 between them yesterday and made three of 25 shots.

"We were doing everything to perfection defensively," Coach Gene Shue of the Bullets said. "They had trouble screening us. We were in the passing lanes and all of their shots were forced from the outside. This was our best defensive game as a team so far."

Despite their lack of offense, the Hawks were still in the game early in the final period, and, following Tom McMillen's fielder, trailed only 76-74. They had trailed by 13 points in the second quarter.

The Hawks didn't score again the next 5:45, though, and the Bullets' 14 straight points put the game out of reach. Don Collins, the game's high scorer with 22 points, had 10 in the fourth period and six in the 14-0 spurt.

Rick Mahorn started the rally with two foul shots and, after a turnover by Atlanta, Collins scored on a fast break. The next time down the floor, Collins stole the ball from Eddie Johnson and drove three quarters of the length of the floor for a basket.

Mahorn scored four of the Bullets' next eight points, the last two on an off-balance 10-footer in the lane that gave Washington a 90-74 lead.

Roundfield broke the Atlanta drought with a dunk with 3:26 to play. Considered by many to be the best all-round power forward in the league, Roundfield played despite a slightly sprained right ankle that hampered his play.

The only thing wrong with Drew was Greg Ballard, the man guarding him. Drew missed 14 of his 16 shots, including his first 10.

"I was playing him for the drive," said Ballard, who had 17 points, 10 rebounds and four assists. "Whenever he did get the ball down low, I'd lay off so he couldn't feel my body against him. When he can feel you, he likes to hook you and go around. I would let him make the first move and then try to force him away from where he wanted to go."

Collins made seven of 10 shots from the field and all eight of his foul shots. Although the Bullets needed Collins' offense, Shue was more pleased with his defense. "I never worry about Don's offense," Shue said.

"I like the open-court game and my defense puts me in a lot of those situations," Collins said. "If I can continue to play good, steady defense, everything will be okay."

Yesterday's game was the first time brothers Eddie Johnson of the Hawks and Frank Johnson of the Bullets had played against each other since high school. Neither did particularly well. Frank had nine assists, but shot one for seven from the field. Eddie, in foul trouble much of the game, had 12 points and four assists.

The Bullets are 8-10 at home and 10-9 on the road. They will play seven of their next nine games at Capital Centre, beginning Wednesday against Seattle.

"Everything is going well," Shue said. "If we can just keep winning at home we'll be fine."