Administration officials said Saturday that Gregg and North worked closely on the structuring of the supply system.

"What has happened about that plane that was shot down in Nicaragua is that the private aid network has been fully exposed and its shadowy links to the White House are now clearer, " one official said.

"The demimonde, the underbelly of President Reagan's policy on Nicaragua has been exposed, " another official said.

But the officials cautioned that while President Reagan and Vice President Bush personally approved of their staffers' efforts in setting up and supervising the network, that did not mean that the U.S. government had been directly involved in operating the supply pipeline or had been directly responsible for the ill-fated C-123 mission.

NO VIOLATIONS SEEN

The officials said the administration remains confident that it has not violated congressional restrictions that prohibited U.S. officials from aiding the contras. The restrictions were approved Oct. 10, 1984, and remain in effect until Reagan's new $100 million aid program for the rebels is formally approved, probably by the end of the month.

"The administration feels there is no administrative proof of its continuing dealings with the contras and thus can deny that it violated the law, " one official said.

Officials said that once the network was set up it was managed on a day-to-day basis by private agents. Those agents continued to report periodically to the NSC and Bush's office both to maintain contact and to pass information about the contras and conditions in Central America to the administration.

The officials who spoke Saturday -- all of whom are familiar with contra affairs -- did not discount the possibility that NSC officials or Bush staffers may have provided logistical, tactical or strategic instructions to their contacts to pass on to the contras.

But they insisted that by and large all U.S. officials involved tried hard to "adhere" to the ban.

Edge of legality "Let's just say that they did not directly break the law but found its legal edge and then danced consciously around it, stretching it to the limit, " one official said.

The private supply network, its White House links and the administration's ability to deny any direct ties to it find their root in the clandestine birth of the rebel movement nearly six years ago and in the later congressional opposition that nearly killed the movement.

Within weeks of assuming office in January 1981, Reagan authorized a secret plan that allowed the CIA and Argentine military officers to organize remnants of the Nicaraguan national guard, defeated by the Sandinistas in 1979, into sabotage units operating from Honduras. The administration said the units were intended to do nothing more than interdict weapons shipments from Nicaragua to leftist guerrillas fighting to topple the government in El Salvador.

But by 1983, with the CIA having invested more than $50 million on the covert program, the initial harassment units had grown into a veritable rebel army, and Congress was becoming concerned.

CAP ON SPENDING

The then chairman of the House Intelligence Committee, Rep. Edward Boland, D-Mass., prevented liberal Democrats opposed to Reagan's policies from shutting down the contra aid program but imposed a "spending cap" on the amount allocated to the agency for the project for fiscal year 1984: $24 million. The restriction also meant that the CIA could no longer dip into its contingency fund to finance additional costs.