After more than a year of debate and controversy, the D.C. City Council is expected to act Tuesday night on a bill that would reduce insurance benefits to workers injured on the job and premium costs to their employers.

Mayor Marion Barry reportedly will propose a series of amendments to the legislation today in meetings with key business and labor leaders.

On Tuesday, labor organizers hope to fill the D.C. council chambers with hundreds of hard hats protesting the bill's provisions, which would give employers broad new powers to challenge claims.

The bill's sponsor, council member Willie J. Hardy (D-Ward 7), first put the measure forward in February 1979, but it was shelved last summer after it was discovered that Hardy had lifted much of the text of her bill from business lobbying documents.

In its first major counteroffensive, the Greater Washington Board of Trade has asked D.C. businessmen also to make a show of force Tuesday night by storming the council chambers in ties and "white collars."

The cost of private insurance to employers, who are required by law to protect their workers against job-related injuries, has skyrocketed more than projected $140 million in 1980.

Businessmen claim that the disability system is rife with abuse by malingering workers who collect two-thirds of their pay tax free up to a ceiling of $426 a week for injuries that prevent them from returning to the job.

Labor officials claim that too much criticism has been directed at the worker and too little at the insurance industry, which is not required to offer competing rates in D.C. and many states under a 1945 law.

Insurance companies file their workers' compensation rates through a rating bureau that is exempt from antitrust laws.

The District problems with the worker compensation insurance program began in the early 1970s when Congress approved major changes in the federal Longshoremen's and Harbor Workers Act, which covers worker injury claims in the District. One of the major provisions of the new federal law was to index injury compensation by tying it to increases in the national average weekly wage. Since the congressional changes, insurance premiums for District employers have increased more than 500 percent.

Hardy's bill would:

Roll back the maximum weekly workers' compensation payment to $396 and freeze it there for about five years until the District average wage (currently about $240) catches up.

Require injured workers to be treated by physicians picked by the employer. Currently, the injured worker can select his own physician.

Shift the burden of proof of injuries to a more equal footing. Currently a worker is presumed to have been injured on the job and therefore entitled to benefits unless the employer produces "substantial evidence" to the contrary.

Offset workers' comp benefits with Social Security benefits where they apply. This single provision would save an estimated 20 percent of current workers' comp insurance costs in the District.

The Greater Washington Central Labor Council has voiced strong opposition to Hardy's bill, saying it will strip workers of rights built up over 50 years. Council member Wilhemenia J. Rolark (D-Ward 8) has led the opposition to Hardy. However, Rolark has endorsed a number of cost saving provisions in Hardy's bill.

John Tydings, executive vice president of the Board of Trade and chief lobbyist for the D.C. business community, said he thinks the Hardy bill will "clearly be an item acted upon at this point."

Several council members are reportedly holding back their assessment of the Hardy bill until Mayor Marion Barry makes public recommendations today.