Thousands of disturbed and mentally retarded children in a federally funded foster care program live in inadequate facilities which are neglected by supervisors who carge the government for services that are never or poorly rendered, according to a General Accounting Office report.

Many children in the Aid to Families with Dependent Children foster care program live in unsanitary sleeping and eating quarters, rooms filled with flies because windows are missing, and have clothes and laundry that are rarely washed, the report charged.

Supervision of the controversial program is so lax that records of many of the 25,000 children in it are not kept by the institutions, which receive an estimated $100 million annually, including $55 million in federal funds, according to the report by congress' investigative agency.

It recommended change in the laws regulating the program to include the retarded and disturbed juveniles who are now unofficially included in it.

Additionally, funding should be increased and standards tightened to insure state, local and institutional compliance with federal regulations, the report urged.

Rep. George Miller (D-Calif.), who requested the GAO study in September, 1975, will introduce legislation at the end of this month in an attempt to correct the abuses found by the study, an aide said.

The AFDC program was set up in 1961 to help children without physical or mental defects who needed temporary care away from their own homes, the report said.

Since then, however, courts, juvenile care organizations and other agencies have "broadly interpreted" the meaning of the law and have sent retarded and emotionally disturbed children to the foster care facilities, the report said.

The resulting influx of juveniles and the inadequacy of federal and state funds for institutions to house them has created a situation in which many facilities do not have the proper licensing to accept the children they care for, and do not offer the special services and treatment the retarded and disturbed need, the 39-page report said.

The report said that "Conditions at the institutions varied from poor to excellent in the maintenance of physical facilities. We observed serious deficiencies at seven of the 18 institutions (studied)".

It found "children sleeping on mattresses on the floor in cramped and dingy rooms; broken and dirty bathroom facilities: . . . cildren's beds pushed up against gas heaters that were operating at full power even though it was a hot summer day."

Eight of the 18 facilities did not maintain required medical records of residents. Records at one institution were kept "wadded behind a desk," the report said.

The GAO auditors said $5,400 annually was spent on transportation, which involved the use of a Cadillac and a Chrysler owned by two of the institutions' directors, the report said.

The GAO auditors visited 18 facilities in California, New York, Georgia and Florida which collectively care for 3,005 children. The facilities were not identified by name or specific location in the report.