Newly installed University of Maryland President John S. Toll yesterday rejected the nomination of Marxist professor Bertell Ollman, who had been selected by a university search committee to head the department of government and politics at the university's College Park campus.

As he announced his decision, Toll emphasized that academic qualifications were the only criteria he used in making his decision, and that Ollman's political philosophy played no role in his deliberations.

Ollman, who is currently an associate professor of political science at New York University, immediately disputed that claim. "Everyone will know I was rejected because of my political beliefs," he said yesterday. "I have become the latest victim of political repression American-style."

Toll's announcement yesterday to the university's Board of Regents was the latest act in an ongoing drama that began in mid-April when some state legislators and Maryland's acting Gov. Blair Lee III questioned the wisdom of appointing a Marxist to a top academic post at a state university.

In the intervening months, the controversy has escalated into a celebrated cause in the academic world, with some observers saying that it goes to the heart of such basic question as academic freedom and the right of scholars to have a major voice in the selection of their colleagues.

Other observers, however, have said that the only question at issue was an entirely proper one: Ollman's academic credentials.

"I must stress as clearly as I can that appointment decisions at the University of Maryland are not and shall not be based on political beliefs, but shall be based on the qualifications of the candidate for the duties of the position involved," Toll said.

But he declined to specify why Ollman's qualifications were inadequate. The search committee recommended him was composed entirely of University of Maryland faculty members, and both the provost and the chancellor of the College Park campus endorsed Ollman's proposed appointment.

Toll did say that since he assumed office July 1 - replacing retiring president Wilson H. Elkins - he has reviewed the Ollmanfile extensively, talked with members of the political science department and consulted outside experts on a confidential basis.

At College Park yesterday, news of Toll's decision brought an immediate and sometimes emotional reaction from faculty and students.

Robert L. Gluckstern, chancellor at College Park and the top academic officer to approve the nomination said, "I have not changed my evaluation of his (Ollman's) qualifications."

But, Gluckstern added, he "accepts the president's decision," and will initiate the process of beginning a new search for a chairman of the department of government and political science.

Others at the university expressed distress of the decision. "What was a very serious effort to build a very fine political science department has been dealt a serious blow," said Stephen [WORD ILLEGIBLE] an associate professor of political science and a member of the search committee that nominated Ollman. "I think it's a shame."

"This is going to make it very difficult to get any good person for the job," said Barbara R. Bergmann, a professor of economics and presidents at the College Park, chapter of the American Association of University [WORD ILLEGIBLE]

"That matter would not have come to Mr. Toll's attention were it not for the political aspects."

However, Elinor Flischke, a departmental colleague disagreed. "He may be qualified, but we can do better," said Flischke. Toll, in informing the [WORD ILLEGIBLE] of his decision had noted that more than one-third of the political science department's faculty members had opposed the appointment, including most of the senior members . . . who had previously served as chairman and were thus in the best position to judge (Ollman's) qualifications."

A Phi Beta Kappa graduated of the University of Wisconsin with a Ph.D. from Oxford in England, Ollman said yesterday he will press ahead with previously announced plans to sue Maryland to force the University to give him the chairmanship. While the suit is pending, he said, he will continue with his duties at NYU.

His major scholarly work is "Alienation, Marx's Conception of Man in a Capitalist Society" - a book that has been praised by many scholars as a major contribution to analyses of Marxist thought.

However, some members of the Maryland political science department were known to have argued that the work involved more advocacy than scholarship. Others, according to department sources, believed Ollman lacked sufficient distinction in his discipline.

Shortly before Toll's decision was announced yesterday, a group of about 12 students disrupted the regents' meeting demanding that Ollman be hired immediately. After being ejected by police they issued a statement charging Toll's decision "strike a severe blow to the concept of academic freedom at this university."

However, Lou Magazzu, president of the Student Government Association said he supports the decision because, among other things. Ollman has not been promoted to full professor at NYU.

Elsewhere, Eugene D. Genovese, a leading Marxist scholar and head of the history department at the University of Rochester, called the decision, "scandalous" and "outrageous."

"I know Ollman's work. He's a smart guy who's made some real contributions. He has the respect of everybody I know," Genovese said.

The American Political Science Association declined to comment on the Ollman decision yesterday.