The dispute over the method of selecting two new federal judges in Maryland intensified this week after Sen. Paul Sarbanes (D-Md.) refused to turn over the names of judgeship applicants to two lawyers' organizations that had asked to screen them.

Sarbanes' refusal came one week after he rejected President Carter's proposal to use nonpartisian citizen selection panels for filling the posts. Instead, he set up his own program to seek out recommendation and advice from the public but reserved for himself the final selection of nominees whose names would be sent to Carter.

In response to Sarbanes' refusal, the lawyers groups made an unusual move: they placed advertisements in a Baltimore legal newspaper this week seeking applicants on their own.

The advertisements said that the Maryland State Bar Association of Baltimore City would screen applications and forward their recommendations to Sarbanes, Sen. Charles Mathias (R-Md.), President Carter and Attorney General Griffin Bell.

Sarbanes said he encouraged recommendations from all interested groups, but he reaffirmed his decisions to choose nominees himself and keep all applications confidential. Sarbanes said if he made the list of potential nominees available to one group, he would have to give it to all interested groups and applicants would not have the confidentiality that the senator believes is vital.

Many lawyers believe that there is a new impetus to open up the traditionally secretive judicial selection process because of Carter's push for non-partisan "merit" selection panels.

Traditionally, federal judgeships, one of the most highly prized patronage appointments have been filled in each state by nominees chosen in secret by senators from the president's party. These individuals were then "recommended" to the president for actual nomination but were rarely rejected.

Senators from 18 states have agreed to Carter's proposal and set up citizen panels to screen applicants.

Sarbanes said he has encouraged public participation by meeting with a wide variety of civic, professional and public interest groups and sending a letter to every lawyer in the state seeking recommendations. As of yesterday he had received more than 60 applications, an aide said.

Though the bar associations' findings will be sent ot Sarbanes, there is no requirement that those who apply to the senator also submit to the bar screening process. Therefore, there is concern in the 7,600-member state bar association that the group could be "finessed out of screening the people who are actually under the most serious consideration," according to a bar association official.

For instance, Baltimore Supreme Bench Judge Joseph C. Howard, mentioned often in legal circles as a leading contender for nomination, has not decided if he will submit his name for bar association screening.

Howard, a judge in the city court since 1968, applied last year for a seat on the Maryland Court of Appeals but failed to win the approval of either the city or state bar associations. The professional groups, as is the custom, cited no reason for their decision.

Howard, 55, refused to speculate on why the groups had not found him qualified but noted that he has been a controversial figure in Baltimore since 1967 when, as a prosecutor, he charged there was a history of racial discrimiiation in the handling of rape cases.

A state bar association official said the group is considering screening not only those who apply for evaluation but also those who are known to be leading contenders for the posts, whether or not they apply.

The Baltimore Chapter of the Federal bar Association is also advertising for applicants who will be screened, but the group did not seek a list of applicants from Sarbanes, according to an official.