The City Council voted Monday to postpone a decision on an ordinance which would dramatically curb smoking in local restaurants and bars.

The Council will hold a preliminary vote on the issue at next week's meeting.

At Monday's meeting, many residents, wearing "It's time we made smoking history" buttons, urged the Council to pass the controversial ordinance, which would allow smoking in only 30 percent of a restaurant's seats and after one year reduce the smoking area to 15 percent of the restaurant.

However, several restaurants owners vociferously opposed the ordinance, saying the restrictions would put them out-of-business.

Last night, several councillors expressed their support for a compromise version of the ordinance submitted by the Cambridge Chamber of Commerce and the Massachusetts Restaurant Association.

The compromise would limit smoking to 50 percent of the seating capacity of the restaurant and would allow smoking in bar areas of restaurants.

Restaurateurs and their supporters said their objections to the proposed smoking ban have nothing to do with an aggressive lobby by the smoking industry to preserve smoking areas in public places.

"It is not about tobacco companies...it's an issue of small businesses and their survival," said Helena G. Rees, public-affairs director at the Chamber of Commerce. "We've talked to restaurant owners and they say 'If you touch the bar area, we will go out of business.'"

Prior to last night's meeting, about 15 people gathered in front of City Hall in order to protest recent attempts by Phillip Morris Company, the country's largest cigarette manufacturer, to convince residents to speak out against the new ordinance.

A spokesperson at Phillip Morris yesterday refused to comment on allegations that the company had been targeting Cambridge citizens, citing a company policy against speaking to student papers.

The Boston Globe reported yesterday that the company has been telephoning city residents, asking them to speak out against the proposed ban.

Some Councillors and residents last night were angry at the company's lobbying efforts in opposition to the ordinance.

"I think it's not an appropriate thing for them to do because smoking ought to be prohibited in public places, and they ought to be cooperating in that rather than fighting that," said Councillor Francis H. Duehay '55. "I think [Phillip Morris's calls] made a difference. It impedes the process which I am sure will eventually succeed."

But Councillor Anthony D. Galluccio said that he has not been called by the Richmondbased company, and that he is skeptical of their influence in the process.

"I think any type of influence they attempt to have will probably not have the desired reaction that they want it to," Gallucio said. "People seem to be making up their own minds on this issue."

Supporters of the ordinance said last night that if the ordinance were voted down, it would show that Phillip Morris can influence policy debate in Cambridge.

"If the city of Cambridge, with the national reputation that it has, votes down the ordinance, word will spread across the country, and it will be a great victory for Phillip Morris," said Edward L. Sweda, a supporter of the ordinance.

Sweda and other speakers last night cited public health concerns in support of the ordinance.

One resident noted that Cambridge reported 175 deaths from lung cancer in 1993.

"The issue is health. Tobacco kills and no one in this room can disagree with that," said Cambridge resident Seth Yurdin.

"The health of Cambridge citizens, particularly its youth, is not negotiable and will not be compromised," said attorney Diane Savage.

However, restaurant owners feared that if the restrictions were passed, customers would move to neighboring towns, like Boston and Somerville, because their smoking regulations are more lenient.

"I'm not greedy and I'm not money-hungry, I just trying to have a business," said Robert J. Salines, owner of Pugliese's Bar and Restaurant. Oners have consistently argued that the proposal is unfair to business.

"If the ordinance is passed, my business will be in serious trouble, because my business will go to Somerville," said one owner of a restaurant near the Somerville town line.

And Cambridge restaurateurs are also worried that many of the people whom they employ, including students, will be unemployed should the ordinance be passed.

"This is an economic health issue. If there is no smoking in Cambridge, then customers will go over the water, and what is that going to do to all the people trying to make a living through the hospitality business?" asked Peter Christie, executive vice-president of the Massachusetts Restaurant Association.

If the proposed ordinance or the Chamber of Commerce's compromise is passed next Monday, it would change the current law, which was passed in 1987, and reserves up to 75 percent of a restaurant for smoking.

--Sewell Chan contributed to the reporting of this article.