Baptist factions struggle over church direction. Moderates are gaining ground in Southern Baptist state conventions. But fundamentalists still occupy the stronghold in the religion's colleges and seminaries.

In the battle for the soul of the nation's largest Protestant denomination - the Southern Baptists - fundamentalists have suffered some resounding defeats in the past two weeks. In nine Baptist state conventions across the South, moderate candidates and causes won clear voting victories over fundamentalists demanding biblical literalism and conservative social values.

But after nine straight years of conservative dominance, the moderate gains do little to restore their control of national Southern Baptist institutions.

As of this summer, conservatives now hold majorities on every board and agency in the denomination except for Southern Baptist Theological Seminary in Louisville, Ky. - one of six Southern Baptist seminaries. And even the Louisville seminary is steadily gaining conservative trustees.

The fundamentalists - or conservatives - read the Bible as historically and literally factual. Though many of the moderates read the Bible the same way, they also tend to tolerate other interpretations under the Baptist tradition of ``the priesthood of the believer.''

The conservative theology of the fundamentalists is matched by their conservative political doctrines - and their willingness to pursue secular causes. Many moderates were dismayed this fall when the Southern Baptist public affairs committee broke a precedent that has stood for well over a century by endorsing Robert Bork's nomination to the Supreme Court.

The new moderate gains indicate that conservative attacks on Southern Baptist institutions and officials ``have begun to arouse backlash even among very conservative people,'' says James Guth, a political scientist at Furman University who has studied Southern Baptists extensively. ``It is a harbinger of some movement.''

``The readout I get from people is that these two big victories [in North Carolina and Georgia] have galvanized the moderates,'' says James Hefley, a Baptist author who calls himself a conservative.

Moderate leaders are now talking of organizing another major run at the presidency of the Southern Baptist Convention when it meets in San Antonio next year. Conservatives have won it nine years running now, usually by about 55 percent to 45 percent. Threats by moderates this summer to break away from the Southern Baptist Convention altogether have faded away.

The most striking moderate victory came last week at the Southern Baptist state convention in Georgia. A conservative, or fundamentalist, president was ousted in favor of a moderate. A bitter fundamentalist attack on Mercer University, a Southern Baptist school, for permissiveness and ``heresy'' was renounced. A church newspaper editor who resigned after clashing with a conservative oversight board was rehired.

But conservatives continue to cinch their clout. This week, both the moderate president and faculty dean of Southeastern Baptist Theological Seminary in Wake Forest, N.C., resigned rather than work under the conservative trustees that took control in June.

The conservative trustees have taken over hiring and say they seek more tolerance at the school for conservative theological views. The resigning administrators see little tolerance for other views.

The theological dispute at the heart of the battle in the Baptist ranks is over biblical literalism. But the larger problem is forging an identity for Southern Baptists as the denomination becomes less provincially Southern, less rural and poor, and more conscious of its worldy political power.

``The two little cocoons that held us together, Southern Baptist loyalty and Southern culture, have broken apart,'' says Bill Leonard, professor of church history at Southern Baptist Theological Seminary.

As Southern Baptists engage the outside world more pervasively, they are reaching in two directions, says Wheaton College church historian Mark Noll - toward the sophisticated tolerance of the mainline Protestant establishment and toward the clearcut conservatism of the Christian Right. The fundamentalists tend to be more working class, more rural, less educated, more likely to live in the Deep South or Southwest than the moderates, says Dr. Guth.

State conventions have always been more amenable forums for moderates. The national convention over-represents small churches, which tend to be more rural, isolated, and fundamentalist.

The big urban churches have a stronger voice in state conventions. Their pastors are typically better educated and likely to have ties with Roman Catholic and Jewish clergy as well as Protestant.

Moreover, closer personal relationships at the state level also probably favor the moderates.

``When people know each other and respect each other, it's a whole lot harder to conduct an ideological crusade,'' Guth notes.

Moderates remain the insiders in the Southern Baptist establishment. At the seminaries, for example, moderate and liberal faculty members are protected by tenure from conservative trustees and administrators.

The Christian Life Committee failed in a tie vote this year to fire its moderate director. At Southeastern seminary in Wake Forest, students and faculty are giving the new conservative trustees a frosty reception, in contrast to standing ovations for the departing president.