James Weldon Hill, a close associate of former city administrator Julian R. Dugas, was removed yesterday as the No. 2 official in the District of Columbia's licensing department as the Barry administration continued its shakeup of top-level city personnel.

Hill was reassigned by Robert C. Lewis, acting director of the Department of Licenses, Investigations and Inspections. Mayor Marion Barry said he "agreed 100 percent" with the action.

Lewis said Hill was relieved of all authority as deputy director of the department and reassigned as a special assistant to Lewis. He will keep his civil service grade, GS-15, and $47,500-a-year annual salary.

Lewis, who disclosed the shift, also announced a staff reshuffling in the department's politically sensitive Alcoholic Beverage Control Board.

He said James R. Johnston, the ABC Board staff director, was demoted to deputy; Mary L. Reed, who was deputy staff director, was reassigned as an investigator, and James R. Boardley, an investigator, was jumped over both of them to become acting staff director.

Lewis said Dugas will remain for now as chairman of the ABC Board and Hill will remain a member. Both were appointed by former mayor Walter E. Washington for fixed terms. There has been speculation that Barry plans to remove them.

The staff shifts are expected to curtail the influence of Dugas and Hill in the ABC Board's administration, since Johnston and Reed are regarded as their trusted lieutenants. The ABC Board issues liquor licenses and is responsible for enforcing city liquor laws.

Lewis told a reporter that the personnel shifts were "a device to improve morale and improve efficiency" in the city's smallest full-fledged department. Its 157 permanent employes issue building permits and professional and business licenses and also administer 22 occupational boards ranging from accountancy to veterinary medicine.

"I was somewhat amazed at the low level of morale" in the department, Lewis said.

Lewis, a former city housing official, was chosen Jan. 24 by Barry as the interim replacement for Dugas, who was persuaded by the mayor to take a post at Howard University.

Dugas, widely regarded as a symbol of arrogance in the city government, reverted in December to his old post as head of the licensing department after serving since 1975 as city administrator.

Hill, 49, became head of the department in 1976. He dropped back to deputy when Dugas returned. Lewis said the deputy post will remain vacant for now. Hill had no comment on the shift.

Since taking office Jan. 2, Barry has removed the top officials of five city agencies, including Dugas, and transferred five high-ranking subordinates from the housing department.

Lewis announced the shakeup yesterday to departmental employes assembled in the U.S. General Accounting Office auditorium to hear and question Barry, who had paid a similar visit earlier in the day to the city's troubled Office of Consumer Protection.

In both appearances, Barry voiced a now-familiar theme, that he expects city workers to become more responsive to public needs. He also said he has imposed a temporary "semi-freeze" on city hiring so he can consider a long-term hiring policy.

At both agencies, employes complained that the staffs are too small to do an adequate job, that their city-rented quarters are substandard -- "a pigpen," one woman said of the licensing office -- and that the city needs a clearer policy for promoting its employes.

Richard Tynes, deputy director of the consumer protection office, told Barry the agency does not have enough staff to investigate reports that some fuel oil companies are refusing to sell to Washingtonians unless they will sign up as permanent customers.

Barry gave no hint of the future tenure of Bettie J. Robinson, the holdover director of the consumer protection office, who has been sharply criticized by some consumer spokesmen. "Once I have had a chance to look [at the whole situation], I'll make a decision about the director over here," Barry told about 40 employes, including Robinson.