The defense of the America's Cup, the international sailing trophy recaptured by skipper Dennis Conner in Australia, will be made in the waters off San Diego in 1991, officials announced yesterday.

The timing and format of the competition, however, might be upset if the New York Supreme Court upholds a challenge by New Zealand banker and yachtsman Michael Fay. Fay is demanding in a suit that the San Diego Yacht Club meet his entry in an early match race for the America's Cup off San Diego or forfeit yachting's most prestigious trophy.

The vote of the seven-member committee designated by Sail America and the San Diego Yacht Club to select the cup site was unanimous, but officials acknowledged the chance that Fay's challenge could succeed.

Tom Ehman, the head of Sail America, the syndicate managing the next America's Cup race, said that even the site would be reconsidered if Fay's challenge proves successful.

The cup finals are scheduled for the first week of May 1991 in the Pacific Ocean off Point Loma.

The committee has 18 challenges in hand from nine nations, and Ehman said he expects to receive a 19th challenge from Canada.