U.S. News & World Report, continuing its expansion of business activities, has created a subsidiary to oversee the company's development of a worldwide electronic publishing system.

The new subsidiary, Publisher Services International (PSI), is a holding company that will provide planning, capital and technical assistance to U.S. News electronic publishing ventures, U.S. News President James H. McIlhenny said.

Included in the subsidiary will be Computer Typesetting Services of Glendale, Calif, which U.S. News bought last month, as well as Publishers Phototype Inc. (PPI) of Carlstadt, N.J., which U.S. News began as a joint venture with Newsweek a few years ago. U.S. News is currently negotiating to acquire a controlling interest in PPI.

"Perhaps other companies" will be added to the subsidiary in the future, McIlhenny said. he subsidiary will enable U.S. News to provide other publishers with a transcontinental electronic publishing service. Through its advanced computer-typesetting and transmission service, PSI will set type for individual publications, then transmit fully composed pages via satellite to printing plants across the country.

"Nobody's ever done anything like this before," said McIlhenny. "No one has ever provided intercontinental--and ultimately we hope international--linkage between publishers and printers except on a private basis."

To make the service transcontinental, PSI plans to build a new plant in Burbank, Calif., within the next few months, installing more than $1 million in new equipment to meet current contracts with more than 50 publishers and the anticipated growth of business.

Among those publishers that already have contracts with U.S. News' PPI are: McGraw-Hill (with Business Week), Hearst, Conde-Nast and CBS publications.

PSI opens with sales commitments of more than $10 million annually.

John J. Tuohey will be president of PSI, whose headquarters will be here at U.S. News executive offices. Tuohey will also continue as vice president of the Manufacturing Group of U.S. News. he creation of the new subsidiary is just the latest diversification move the weekly newsmagazine has taken in recent months.

Last month, U.S. News entered the broadcasting industry with its purchase of the Bethesda-based Parkway Productions, the nation's leading producer and distributor of fine arts radio programming. Renamed Parkway Communications Corp., the company plans to transmit programs via satellite to more than 300 stations across the country.

In August, the magazine announced it had selected Boston Properties as its joint venture partner in a $200 million development project on more than three acres of land U.S. News owns in the West End area of Washington. This project will not only include a new headquarters building for U.S. News but also a 450-room luxury hotel, an investment office building and town house and high-rise condominium buildings. Construction is scheduled to begin in less than a year.

These new ventures are in addition to the weekly magazine that has an estimated total reading audience of 10 million, U.S. News Books, The U.S. News Washington Letter and The Washington Business Report.