The U.S. Department of Housing and Urban Development has taken preliminary steps to sell the 285-unit Clifton Terrace Apartments, a troubled project on one of the District's choicest real estate sites.

HUD notified tenants last week that it will sell the project "in the near future." A HUD official directly responsible for the buildings said yesterday, however, that the proposed sale is in early paperwork stages and is still one to two years away.

The department is now surveying the incomes of the project's 1,000 or so tenants to determine how many would be eligible for continued assistance after a sale. Regardless of the results of this survey, the apartments will be preserved for use by low-income tenants once the project is sold, a HUD official said yesterday.

The decision to sell is in accord with HUD's policy of disposing of properties it owns, this official said.

Originally a luxury apartment building, Clifton Terrace commands a sweeping view of downtown Washington from its location atop Cardozo Hill, at 1308, 1312 and 1350 Clifton St. N.W. With single-family renovations changing the character of the surrounding Columbia Heights neighborhood, Clifton Terrace in recent years has caught the eye of developers interested in converting it to expensive condominium apartments.

The 60-year-old building, built by noted Washington architect Harry Wardman, deteriorated badly in the 1950s and 1960s.

HUD acquired Clifton Terrace in the early 1970s after a default by the Housing Development Corp., whose mortgage was insured by HUD. In 1975, the department sold the buildings to P.I. Properties Inc., a spinoff of the self-help Youth Pride organization.

Department officials foreclosed on P.I. Properties in 1978 after concluding that there was "overwhelming evidence of poor management" by the firm.

The Washington Post reported in a series last October that the top officials of P.I. Properties -- Mary Treadwell, Robert E. Lee Jr. and Joan M. Booth -- had stolen at least $600,000 from HUD and the low-income tenants while operating Clifton Terrace.The three either denied wrongdoing or declined to be interviewed. A federal grand jury currently is investigating the situation.