Ketchup didn't cut the mustard as a vegetable in school lunches, but its cousin, salsa, does.

Overseers of the federal school lunch program, which serves 26 million children, have determined that school cafeterias can dish up salsa as part of a nutritionally balanced menu.The low-fat, low-cholesterol sauce, which typically consists of tomatoes, peppers, onions and spices, succeeded where ketchup failed. In 1981, the Reagan administration backed away from a widely ridiculed plan to grant vegetable status to ketchup, which includes vinegar and sweeteners.

Agriculture Department officials responsible for the salsa decision are clearly sensitive about the inevitable comparison to the ketchup flap.

"There is no relationship," declared Ed Cooney, deputy administrator of special nutrition programs at Agriculture's Food and Nutrition Service.

Salsa's designation as a vegetable comes as part of USDA's push to offer an array of low-fat, nutritious, appealing foods to students, Cooney said Tuesday.

The ketchup-as-vegetable proposal, by contrast, was put forward as a cost-saving option at a time when the Reagan administration was trying to pare $1.5 billion from the school lunch program, he said. The ketchup proposal was "a device to make believe that you could recommend $1 billion in cuts and no one would be harmed," Cooney said.

The salsa decision is winning kudos, even with the nation's self-appointed food police.

The Agriculture Department weighed the salsa question at the urging of schools in the Southwest and West.