A man accused of sticking a needle into a bar of butter at a supermarket on Sunday was described at a court hearing yesterday as a man who had once been diagnosed as a chronic schizophrenic and who still needed treatment.

The suspect, Grant Day, 26, who had been living at a D.C. Corrections Department halfway house, was ordered held at St. Elizabeth Hospital for observation.

Day's arrest on Sunday followed disclosure by police the previous day that they were investigating 23 incidents in which needles or other objects had been inserted into food sold or stocked in recent weeks at Safeway and Giant Food supermarkets.

All of the incidents initially reported involved stores in Washington, except for one at a Safeway store in Northern Virginia. Since then, according to authorities, there have been reports of similar incidents in Maryland.

A spokesman for Safeway said four new reports of contamination involving needles have been received in recent days, two involving Maryland stores, one in Washington and one in Northern Virginia.

Ernie Moore, the spokesman, said that all four reports involve food apparently bought either before or immediately after the arrest of Day.

In addition, police in Prince George's County said yesterday they are investigating reports of needles found in food products purchased at a drugstore and a food store in the county.

Day is the only person arrested so far in connection with any of the incidents of food contamination.

D.C. police said they have no evidence to link him with any of the incidents other than the one that preceded his arrest Sunday. In that incident, according to court records, a female customer at the Safeway store at 228 Seventh St. SE saw a man insert an object into a 4-ounce bar of butter. The object was later found to be a needle, according to the records. Day was arrested at a bus stop near the store, according to police.

Many persons among customers interviewed yesterday at the store where the incident occurred expressed concern about the possibility that food might contain foreign objects, and said they were taking precautions to find them.

"I'll be careful," said a woman who identified herself as Mrs. Robert L. F. Sikes, wife of a Democratic representative from Florida. "I think I'll spot it if I'm careful enough," she said.

A woman who said she was an aide to a member of Congress from New York, but who declined to be indentified by name, was carefully studying cake mix boxes and said she was looking for needle holes. "I thought twice about even coming in here," she said.

Describing herself as unconcerned by the incidents, Adelaide Gordon said she worked for the Department of Health, Education and Welfare.

"I am not worried about it," she said. "I check everything very closely to see if it's been opened and when I get home I check it again."

No injuries have been reported in connection with any of the incidents and Giant and Safeway spokesman both said that business has not been affected.

Day has been charged under the federal Food, Drug and Cosmetic Act with one count of alternation of an item shipped in interstate commerce for sale.

Day had been sent to the halfway house at 1010 North Capitol St. after a petit larceny conviction.

A Department of Human Resources psychiatrist who has been treating him since December told the hearing yesterday that Day was diagnosed as a chronic schizophrenic in 1975, has been progressing, but requires further treatment.

Dr. Nuha Abudabbeh said she had never known Day to act in a hostile or violent manner and she characterized him as usually smiling and withdrawn.

He is to appear March 17 at a lineup scheduled in connection with his arrest on Sunday.