WASHINGTON - Not many years ago, the Central Intelligence Agency automatically denied a security clearance to anyone it suspected was homosexual, on the theory that gay men and lesbians were ripe for blackmail.

This week, the CIA held a gay pride celebration at its Langley, Va., headquarters, hosting gay Rep. Barney Frank, Massachusetts Democrat, at a ceremony intended to underscore how far the agency has come from its homophobic past.

"The fact that I would be speaking at Gay and Lesbian Pride Month at the CIA - yeah, that’s a sign of real progress,” Frank said Thursday, two days after he addressed about 100 gay intelligence workers in the CIA’s awards suite and met privately with George Tenet, the director of central intelligence.

Busloads of openly gay employees from the National Security Agency also attended the ceremony, in which CIA Executive Director David Carey, the agency’s No. 3 official, said he was pleased to welcome Frank even though the House member had voted to cut the intelligence bud-get.

Frank responded that he had tried not only to cut, but also to “out” the intelligence budget, a classified figure. But, he added, “Your budget by now is about as big a secret as my sexuality.”

Overall U.S. intelligence spending, including the CIA and NSA budgets, is said to be about $30 billion this year.

Gay intelligence officers began to abandon their deep sexual cover after President Clinton signed an executive order in August 1995 prohibiting the denial of security clearances “solely on the basis of the sexual orientation of the employee.”

The executive order rescinded an earlier directive, dating from the Eisenhower administration, that classified homosexuality as a “sexual perversion” and said it was automatic grounds for denying a clearance.

Gay men and lesbians at the CIA began organizing in 1996. The group they established the Agency Network of Gay and Lesbian Employees, or ANGLE received official recognition last year from the agency's Office of Equal Employment Opportunity.

ANGLE’s chairman, a female computer specialist with 15 years’ experience in the Directorate of Science and Technology, said senior officials were both supportive and surprised when gay employees first came for-ward. The CIA “is just a very conservative agency,” she said.

Another ANGLE member, an economic analyst in the Directorate of Intelligence, said he thought Frank’s appearance Tuesday “was very important for the culture here at the agency - it was a real milestone in getting the issue, that there are gay and lesbian employees here, exposed to the major population.”

CIA officials declined to release either employee’s name and did not make any public statement earlier this week about the gay pride ceremony. The agency also made no announcement a year ago when Richard Socarides, a former White House liaison official on gay issues, attended the agency’s first commemoration of Gay Pride Month.

The NSA’s treatment of its openly gay employees has been similarly low key since the Alan Turing Chapter of Gay, Lesbian or Bisexual Employees was formed at its Fort Meade head-quarters last year. Turing was a legendary British cryptologist who helped break German codes during World War II but committed suicide after being forced to undergo treatment for his sex-ual orientation in the 1950s.

Rep. Porter J. Goss, the Florida Republican who is chairman of the House Permanent Select Committee on Intelligence and a CIA operative in the 196Os, said he was ambivalent about openly gay intelligence officers.

“I’m not going to make a moral judgment whether it’s a good thing or a bad thing,” Goss said. “The more important question is - is it advantageous to the mission? And I guess I could take either side of the argument and say, in some circumstances it may be good and in some circumstances it may be bad.”

Goss said he could envision circumstances in which gay employees, open or not, could be subject to blackmail. The existence of a gay employees’ support group, he added, represents a vast change from “the CIA of my day,” when officers were grilled about their sexual orientation on polygraph tests for fear of blackmail.

R. James Woolsey, who served as CIA director from 1993 to early 1995, was more enthusiastic about Frank’s appearance. “I think it’s perfectly fine for Barney to go out and talk at gay and lesbian pride week. Times change,” Woolsey said. “If the blackmail threat is removed, which has been done socially and culturally over the years and was ratified by the Clinton order in the summer of 1995, it seems to me gays and lesbians ought to be able to be CIA officers.”