United Press International said yesterday that it plans to implement a radical realignment of services, cut back staffing levels and restructure its pricing in an effort to slash costs and stem the erosion of clients at the beleaguered wire service.

Breaking with a tradition that dates from the creation of UPI, the wire service -- which is owned by Mexico City businessman Mario Vazquez Rana -- said it will no longer try to go head-to-head with the Associated Press on every story.

"We're not going to be trying to compete with the AP in reporting every little fact and figure anymore. We'll leave the traffic accidents and the court cases to the AP," said UPI spokesman Christopher Smith. "We will have limited state operations in states with little or no revenue base or growth potential."

He said UPI is aiming for a "more targeted, focused" report. Reporters will only cover local stories if they are of exceptional interest, and they will focus on the "why" rather than produce straight news stories which long have been the bread and butter of UPI, he said.

The formal plans are to be unveiled in the next few weeks, according to Smith. He said UPI hopes the cheaper, slimmed-down reports will win back the medium-sized papers that have left UPI in droves in recent years.

The newly streamlined UPI will require fewer employees, Smith said. He said he did not know how many employees would be cut, but as of yesterday, 33 employees had been laid off and eight bureaus were not staffed, he said.

However, the Wire Service Guild, the union representing UPI's staffers, strongly disputed those figures. Dan Carmichael, secretary-treasurer of the Guild, said 100 workers have have been fired by the wire service since Dec. 22.

UPI had 850 domestic employees before the cuts, so that would constitute a 12 percent reduction in staff.

Carmichael also said 12 bureaus were not staffed, and the Guild assumes those bureaus will be shut down. Smith disagreed, saying that some of the bureaus could be kept open a few days a week with reporters from other bureaus.

The round of firings is the second wave of layoffs in recent months. In November, 25 temporary and probationary employees were dismissed, according to Carmichael.

The Guild said it is expecting more layoffs. "We have learned that the company has prepared for the third wave of layoffs," said Carmichael. Smith said he expected more layoffs to cut costs, but would not give specifics.

"Is there going to be a UPI at the end of the year? That is the critical question," Smith said. "We're looking to get UPI back on its feet financially. In doing that, we can guarantee the long-term future of the company."

Rumors continue to circulate that Vazquez Rana, who bought UPI in the summer of 1986, is trying to sell the wire service, which is losing at least $1 million a month. UPI has been rumored to be negotiating with Financial News Network and Cable News Network. But Smith denied those rumors. "UPI is not for sale," he said.