A Full Optimized Reaction Space (FORS) wavefunction is defined as the optimal configuration interaction wavefunction in a full space of N-electron configurations where all orbitals are optimized. A method is developed for generating configurational basis of such a full reaction space;The results of multi-configuration self-consistent-field (MCSCF) calculations using FORS wavefunctions are discussed for the low-lying electronic states of allene at planar geometries;Two possible augmentations to the FORS model are developed. The first is a semi-empirical correction method, termed the Intra- Atomic Correlation Correction (IACC) model where FORS wave- functions are expressed in terms of configurations, generated from localized molecular orbitals, which have the character of atomic states. With the help of these expansions, correlation corrections, available from atoms, are transferred to the molecular wavefunctions. The second augmentation consists of improving the FORS wave- function by the systematic inclusion of additional configurations involving orbitals outside the valence space. The effectiveness of;both approaches is demonstrated by applications to a series of diatomic molecules; *USDOE Report IS-T 1153. This work was performed under Contract No. W-7405-eng-82 with the U.S. Department of Energy.