The man chosen by Mayor Marion Barry to head the troubled D.C. Labor Department reported yesterday that he has found the agency "a monster that needs to be corrected" in both its organization and its delivery of public services.

After one month as its acting director, William R. Ford reported to the mayor that the department "ranks at or near the bottom" nationally in several of its public functions, including its employment service, the federally funded CETA jobs program and unemployment compensation.

Overall, he said, departmental conditions are "unfavorable . . . the worst situation I have experienced (in my career)."

A former Michigan state manpower official, Ford is awaiting City Council confirmation of his nomination by Barry to be permanent director of the department.

Ford's comments, offering an inside confirmation of the department's longtime poor public reputation, were made in a written report released by Barry at a news conference.

Barry called the conference to announce the creation of a joint task force made up of officials of the .D.C. and U.S. labor departments who will evaluate the municipal agency and recommend changes.

Heading the task force will be Ray Williams, a veteran of 29 years in the U.S. Labor Department who currently is deputy administrator of its Kansas City region.

Barry said the review will start next Monday with recommendations due Nov. 30.

Ernest Green, an assistant U.S. secretary of labor who attended the news conference, praised Barry for seeking federal help. It "broke a new relationship between the District government and the U.S. Department of Labor," Green said.

Green headed the crackdown that led to a finding in July that the D.C. City Council in past years had misused the Comprehensive Employment and Training Act program, commonly called CETA, and that the city must repay $1.4 million in misspend payroll funds.

Green softened that blow, however, by permitting the District to spend the $1.3 million on a future expansion of its own CETA program.

Ford, in reviewing the local department's operations, said it rated No. 2 nationally among all states and other jurisdictions in the number of staff members per capita, and ranked No. 50 in its success in placing job applicants. He said it also was found to be far slower than it should be in paying unemployment compensation.

Ford would not release the statistical study from which he drew the figures.

Among possible reforms, Ford said, would be decentralizing the department into several one-stop service centers in various city neighborhoods.

All clients must now go to departmental headquarters at Sixth Street and Pennsylvania Avenue NW where, Ford said, many "get lost in the maze."

Despite the department's reputation, Ford said it has "many very capable people . . . it can work with the right organizational structure."

The D.C. Labor Department evolved from many years of operating as the local arm of the federal department prior to the arrival of home rule in 1975. Its long-time former head, Thomas A. Wilkins, was removed by Barry soon after taking office last January.

Wilkins currently is on a two-year detail to the National Institute of Public Management, with the D.C. government paying 49 percent of his $47,500 salary, according to D.C. city administrator Elijah B. Rogers.