HERSHEY, Pa. (AP) _ State Treasurer R. Budd Dwyer, who killed himself during a news conference, was praised by his widow at a Saturday memorial service as an honest, loving man betrayed by the system to which he devoted his life's work.

Joanne Dwyer told about 500 people jammed into All Saints Episcopal Church that Dwyer felt he had lost everything following his conviction last month on charges that he took part in a bribery-conspiracy in the awarding of a state contract.

''He felt ashamed and a failure,'' Mrs. Dwyer said in a clear and firm voice. ''But Budd was not a failure; he was a hero.''

Dwyer, 47, shot himself to death during a news conference Thursday at his state office. He was to have been sentenced Friday.

Mrs. Dwyer, 47, wearing a fur coat in the bitter cold, was accompanied to the service by her children, Robert, 21, and Dyan, 18. They ignored a crowd of reporters as they walked into the small church.

In her remarks, Mrs. Dwyer thanked the mourners, who filled the main church and a social room downstairs where a picture of Dwyer surrounded by a black drape had been placed at the front of the room. The people downstairs, including reporters, listened to the service over a public address system.

Among those attending were U.S. Sen. Arlen Specter, R-Pa; Democratic Lt. Gov. Mark Singel, inaugurated Tuesday, and former Republican Lt. Gov. William W. Scranton III.

Afterward, Mrs. Dwyer and the children stood in a receiving line. A funeral service and burial is planned for Monday in Meadville, where the family formerly lived.

In a 21-page statement Dwyer gave reporters at the fatal news conference, he complained that he had been unfairly made a target by federal prosecutors, who selected a conservative judge, jury and trial site.

Dwyer was convicted after a five-week trial in federal court in Williamsport of five counts of mail fraud, four counts of interstate transportation in aid of racketeering, one count of perjury and one count of conspiracy to commit perjury.

Prosecutors alleged that Dwyer had agreed to accept $300,000 bribe in exchange for signing a state computer contract with a Newport Beach, Calif., firm. However, no money ever changed hands; the contract was canceled when the scandal came to light.

''Budd was an innocent man,'' his wife said. ''He was the most honorable, courageous man the political scene I think has ever produced ... He felt the system that he had worked for all his life had betrayed him and that no one would listen.''

Mrs. Dwyer, who arrived at the church with a police escort, told the congregation that the family had heard of the suicide on the radio and had no idea of Dwyer's plans.

''We assumed he was coping our way ... in planning his vindication, in making positive references to the future,'' she said. ''But Budd was coping in his own way. He was making his own plans ... He left the house Thursday and we would never see him again.''