District of Columbia government workers who are laid off while they are living outside the city must move into Washington before they are eligible to be rehired, the City Council decided yesterday in refusing to limit the scope of the city's residency requirement.

Under that residency law, part of the 1978 Merit Personnel Act, city workers hired since January must be District residents at the time of employment, or must become residents within six months of that time. Exceptions were granted for workers on the payroll before January who lived in other jurisdictions.

The bill introduced yesterday by Council Chairman Arrington Dixon, would have exempted nonresident former employes from having to move into the city to be rehired. That bill was killed when it failed to win a majority of the votes of members present in the 5-to-5 vote that decided the issue. The other three members were absent.

More than 1,000 city workers have been laid off this year at D.C. Major Marion Barry has attempted to balance the city's books and ease the worsening budget deficit through program cutbacks and reduction of the work force. Many of those laid-off employesalready have been rehired, usually at lower salaried positions than they formerly held. Officials say there is no quick way to determine how many of these workers live outside the city.

Dixon introduced the residency-exemption legislation yesterday in response to a request from the Board of Education. About 700 teachers have been laid off, and the residency requirement was preventing the school system from rehiring some of them to fill vacancies.

Dixon said he decided to expand the proposed exemption to include all former District government workers. Dixon said that "the Board of Education has brought to our attention a problem which should be more generally and uniformly resolved for all employes of the District government." g

Council members John Wilson (D-Ward 2) and Charlene Drew Jarvis (D-Ward 4), the bill's most vocal opponents, said the exemption would threaten the purpose of the residency rule, and that laid-off employes who live in the city should be given preferential treatment in rehiring.

The council also debated the question of whether to create a Civilian Complaint Review Board to consider citizen reports of police misconduct. Formation of the board was approved in a preliminary vote. The board, proposed by the major, would be a seven-member body with subpoena powers that, in effect, would allow citizens with complaints against police officers to circumvent the police department's internal affairs structure.

The board's membership would include four citizen members, a police union representative, a member representing the police chief, and a lawyer who would serve as chairman. The board would hold hearings and, if it so decides, make recommendations for disciplinary action to the police chief.

Final action on this proposal is scheduled in two weeks, assuming that no more substantive amendments are added. One amendment offered yesterday by the major's office was approved, and would allow the major to review the police chief's decision when that decision differed from the review board's recommendation.