In January 1976, under a national program to help low and moderate income families, the city's housing department received enough money from the federal government to subsidize the rent of 200 needy families have been placed in apartments.

Then, several weeks ago, Mayor Walter E. Washington announced that the city has received money to subsidize housing for an additional 370 families. He said the extra money "will permit a substantial number of families and individuals to move into existing decent housing . . ."

But last week, city housing officials who were asked about the program said they had no idea when they would spend this money. They are still trying, they said, to get enough tenants to apply for 52 of the original 100 units set aside in the first allocation for the elderly and the handicapped.

But while the city was almost begging for more applications from those who are elderly or handicapped, there is a waiting list of 1,200 families for the 100 units set aside for them. The application period closed last Friday.

The conclusion to be drawn from these examples, according to Ann T. Avelino, director of the city's Section 8 housing program, is that program is working well for the elderly but quite poorly for needy families. The basic reason , she said, is because rents allowed under the program by the federal government are too low and given the city's very low vacancy rate, landlords do not want to rent their large apartments to poor families with several children.

"We have elderly units and we don't have enough elderly applicants (to fill them)", Avelino said, "but we have more than enough families and the problem is finding units for those who need two bedrooms or moer."

Because of this imbalance, last week Avelino and her staff restricted applicants to the elderly and the handicapped.

"We have landlords sitting and waiting for the elderly applicants because they make desirable tanants," she said. "They are conscientious about paying their rent and they care for property," a reputation not enjoyed by needy families with children.

When the Section 8 program was adopted as part of the 1974 federal housing act, it marked a major departure for the government in the way it helped low and moderate income families obtain adequate housing.

Since Section 8 is to replace all existing subsidy programs, it becomes crucial that it work in Washington and other large cities, said housing experts.

According to the city's statistics, there are 37,945 needy families and 13,727 needy elderly and handicapped persons who need housing assistance because they are living in overcrowded housing or pay more than 25 per cent of their income for their housing.

Under the new program, the elderly, the handicapped and families who meet the income requirements, find their own housing on the private market.

If they find an apartment where the rent meets the guidelines established by the federal government ($173 for an efficiency including utilities for example) and if the landlord agrees to rent the apartment to the Section 8 person, then the family pays 25 per cent of its income toward the rent and the federal government pays the difference between that amount and the actual rent.

Since a family is only given a maximum of 120 days to find a place to live after they are certified for the program, 174 families have had their certification cancelled because they could not find a place within the alloted time, she said.

"We've had so many people get discouraged especially those looking for large unit," she said.

A working mother of four who now lives in Anacostia and who has qualified for Section 8 housing could not agree more.

The woman, who asked that her name not be used, said she had been looking for a four-bedroom apartment daily since Feb. 22, with no success.

"I've tried quite a number of places but they don't have vacancies," she said. Or the rent exceeds the federal levels, or the landlords will not rent to a Section 8 family, she said.

She said she found an apartment complex that met all the qualifications but when she told them she would be receiving a subsidy under the program, she was told the landlord was not accepting any more Section 8 families.

Avelino agrees that the allowable rent levels are too low and she said city housing officials have started negotiating with federal housing officials to see if they can be raised.

In addition, 10 days ago she met with members of the city's board of realtors in an effort to interest them in making apartments available under the program. James G. Banks, former dierector of the city's housing with the realtors board, said that in early May, the board will launch an intensive drive to obtain more apartment.