State funds for cities and towns across Massachusetts are likely to be cut if legislators and adminstrators on Beacon Hill do not find a solution to the $830 million state budget deficit this month, the House assistant majority leader said yesterday.

"I think [local aid] will be cut," said Rep. Mary Jane Gibson (D-Belmont). "That would mean very severe effects on cities and towns with very thin budgets."

In a private session yesterday, House Speaker George Keverian '53 and his leadership team discussed withholding an estimated $600 million in local aid to rescue the state from its fiscal crisis, said Gibson, who attended the meeting.

The meeting was one of two yesterday, called by top Beacon Hill Democrats to rethink fiscal strategy after the resounding defeat in the House last week of a $1.2 billion tax package strongly supported by Keverian and Gov. Michael S. Dukakis.

"The House leadership reviewed what happened and what's ahead," said Al Frezza, Keverian's chief of staff.

The speaker sent the tax package back to the House Ways and Means Committee on Friday after House members voted to strike from the bill a hike in the capital gains tax. Frezza, however, said the committee is not planning to introduce an altered version of the tax package.

Rep. Richard A. Voke (D-Chelsea), chair of the House Ways and Means Committee said in a statement this weekend that his committee would not release another tax package and that it was up to Dukakis, who has repeatedly said he supports new taxes, to propose one.

"The governor was told to start making more cuts," Frezza said. "There will either be huge cuts that will devastate government as we know it or a combination of deep cuts and new revenues."

Dukakis met yesterday with Keverian, Senate President William M. Bulger (D-Boston), House Majority Leader Charles F. Flaherty (D-Cambridge) and the chairs of the House and Senate Ways and Means Committees to discuss revenue and savings ideas.

The Senate is to consider a House approved deficit reduction bill this week or next which, if passed intact, will lower the deficit by an estimated $300 million.

A spokesperson for the governor said Dukakis is optimistic that the Legislature will develop a plan to erase the remainder of the deficit before Christmas.

"He's a lot more optimistic than the Legislature," the spokesperson said.

House members have said that a lack of leadership from the governor, as well as partisan politics, have broken down the unity of House leadership. As a result, many legislators do not believe that solution will be reached before the holiday recess, a delay that could make the budget deficit even higher.

"There's no leadership from the governor. He's been out of the loop for six months," said Rep. John H. Flood (D-Canton), chair of the House Taxation Committee.

Flood, a 1990 gubernatorial candidate, is one of several House chairs who opposed last week's tax package.

Two other members of the House leadership team who vote against the tax hike--Robert A. Cerasoli (D-Quincy), chair of the Post Audit and Oversight Committee and Kevin P. Blanchette (D-Lawrence), chair of the Public Service Committee--resigned their posts late last week because of pressure from Keverian to vote for the package.

Frezza said Keverian has not decided whether to seek more resignations from his leadership team if they continue to oppose a tax package.

"I've never worried about my chairmanship," Flood said. "You don't fire someone for being right, and I'm certainly not going to resign because I'm right."