Another of Associated Press's little efforts. PM-Save The Worm, Bjt,0656 Town Tries To Save The Giant Worm That Saved It LaserPhoto SYD1 By RICHARD BILL Associated Press Writer KORUMBURRA, Australia (AP) - The federal government has chipped in $11,000 to help save the 12-foot, gurgling earthworms that transformed Korumburra from a near ghost town to a bustling tourist attraction. Several years ago, Korumburra decided to promote the invertebrate, which has 16 hearts and is a hermaphrodite, meaning it is both male and female. The great Gippsland gurgling earthworm is so named because of the sucking and gurgling noises it makes when it burrows, sounding like a bathtub draining water. Townsfolk credit the earthworm, whose scientific name is megascolides australis, for helping turn their fortunes around. An annual worm festival called Karmai, after the aboriginal word for giant earthworm, is held each March. It celebrates the worm with parades, carnivals and even an earthworm queen. Recently, however, intensive farming in the worm's small habitat has raised fears the worms' days are numbered. Korumburra is in Gippsland, an area of the southeast state of Victoria that once was covered by a rain forest where the worms thrived. Today, that habitat has been reduced to an area of 100 square miles around the Bass River. Settlers, who thought the worms were snakes, cleared Gippsland's rain forest with its 300-foot trees in the 1880s to make room for dairy farming and cattle raising. Although not officially protected, the earthworm is now listed as endangered, according to worm expert Georgina Hickey of the Australian Museum. Federal Environment Minister Graham Richardson announced an $11,000 save-the-worm grant last week as part of a $383,000 package to study other threatened species in Victoria, such as the koala bear and the fairy penguin. Korumburra began exploiting the earthworm as a tourist attraction in 1977 after the local coal mine went bust, a butter plant shut down and young people began heading out of town in search of jobs. ''The worm saved the town,'' said Mark Holmes, on whose property most of the worms are found. ''The worms help people have an identity. I don't know if they're proud of what they've got but we've got something unique. We've got a thing that is dropping off the face of the earth.'' Promoting the giant worms wasn't easy, local tourist offical Judith Nicholl admits. ''Of all things in the world, how do you promote a worm?'' she told a recent visitor. ''It started out as a fun thing but now it's very serious. Now when visitors arrive the first thing they ask is 'Where is the worm?''' Visitors now flock to Korumburra, population 2,800. The town's shops display fluffy toy worms and cute cutouts on windows, colored pink because brown, the worm's natural color, isn't attractive. Festivities climax with a 100-foot fake worm resembling a Chinese dragon that is hoisted and weaved through main street by 60 or 70 children. A nocturnal animal, the worms are difficult to dig up and residents discourage the practice because the worms can break apart and bleed to death when yanked from the rich clay on which they thrive. Townsfolk proclaim the worm as the world's largest, although long worms are found elsewhere in the world. Despite their fame, the local worms remain underground. There is no worm museum in Korumburra or even a display. However, entrepreneurs John Matthews and Tony Zoanetti opened a worm attrion at Bass, 25 miles down the highway toward the Phillip Island penguin reserve, a major tourist attraction. There, visitors enter a 300-foot-long building shaped like an earthworm and can walk through a section that simulates the internal view of the worm's stomach, complete with gurgling noises. Visitors also experience a worm's eye view of its world below ground. With a $3 entry fee for adults, up to 1,000 people visit the attraction daily. AP-NY-04-14-88 0424EDT ***************