The Kennedy Center has canceled its free play-reading series, held periodically since November in the Center's Musical Theater Lab, in a dispute over demands by Actors' Equity regarding hiring policy and benefits for the actors.

"I'm not going to submit to that kind of nonsense," said Center chairman Roger L. Stevens yesterday. "Here we were giving people a chance to do their plays and it was costing us a lot money as well."

Equity wants the Center to hire only resident union actors for the series. Also, if a play goes into a major production or into further workshop productions at the Center, Equity has demanded that the actors be offered the same roles again or be given two weeks' salary.

So far, the Kennedy Center has held two play-readings, in which actors read from books, with minimal staging and no costumes. (Two more scheduled for January were canceled by the Center.) Actors were hired for $140 plus three months' health benefits for about 26 hours of rehearsal at the beginning of the week and from one to four performances at the end of the week.

"The whole series is set up so playwrights can see and hear the audience's reaction to their play," said Deborah Dixon, who reads and scouts plays for Stevens and also produces the series. "The premise of the project is so innocent it hurts." Playwrights get $1,000 if their plays are read, Dixon said.

"There are fine professional Equity actors in the Washington area who should enjoy whatever acting opportunities are avaliable in Washington," said Willard Swire, associate executive secretary for Actors' Equity in New York. "And actors tell me the opportunities are limited."

"There are a lot of actors around here who don't belong to the union," said Stevens, "so that cuts a lot of Washington actors out of work. It also keeps us from using the best person if they are not a member of the union."

For John Pielmeier's "Mortal Coils," which opened the series in November, all three actors were union members. In the second production last December -- "Transfiguartion in Precinct 12" by Leslie Stevens -- five of 17 were nonunion. Dixon said she was informed by Actors' Equity of their requirements for "Transfiguration" on the day it opened and was told that if she did not follow them, Equity would strike the Kennedy Center.

Swire said he had no comment on any of Dixon's allegations. He explained Equity's requirement that actors must be recast in any major productions: "If those actors are going to help develop the play -- basically for expenses -- they should get the opportunity to be cast in any commercial version the Center does. Or they should at least get proper reimbursement for what they did in the play-reading series for practically nothing."

Except for the Musical Theater Lab, all other dramatic houses at the Kennedy Center require that actors be or become union members; and all the others charge admission for performances.

Stevens and Swire have set a meeting in New York for later this week. "I called Roger and asked him to come to New York," Swire said. "Hopefully we can resolve this."