District landlords and tenants groups clashed sharply yesterday at a City Council hearing on proposed legislation that would allow tenants to make their own repairs and deduct the costs from their rent payments.

"The bills are a disaster. There's such a fantastic potential for fraud and abuse that it is unbelievable," argued John T. O'Neill, executive vice president of the Apartment and Office Building Association, which represents owners and operators of about half the 140,000 licensed rental units in the city.

"The landlord who does a good job has nothing to fear from this bill," said Richard C. Eisen, an attorney who specializes in tenants' rights. Eisen argued that the city's existing laws protecting tenants are cumbersome and poorly enforced, allowing landlords to take up to two years or more to make some repairs.About 500,000 city residents, nearly 70 percent of the District's population, live in rental housing.

Both landlords and tenants who spoke at the six-hour hearing before a City Council committee yesterday said the fight over the repairs proposal will rival their emotional, long-running battle over rent control.

The late afternoon session held by Council member Charlene Drew Jarvis (D-Ward 4), chairman of the housing and economic development committee, drew a crowd of over 100 people. More than35 witnesses spoke.

"They may get everything they want legally" from the council, one landlord representative said, "but they won't have any place to live in the city" because landlords would be forced to close their buildings.

"They haul that argument out year after year," said tenant organizer Larry Weston . "They did it with rent control. They're still here. It's a bogus issue."

The council committee is considering two "repair and deduct" bills. One bill, introduced by Council member David A. Clarke (D-Ward 1) would limit tenant repairs to individual units and costs equal to one month's rent.

A similar bill offered by Council member Hilda Mason (Statehood-At-Large) would also allow repairs in common-use areas and limit costs to $500.

Both bills would require advance notice to landlords to give them a chance to make the repairs themselves.

Damage caused by tenants would not be covered by the legislation, and part of the controversy over the bills revolves around how the cause of damage to an individual unit is determined.

Tenant groups said several versions of "repair and deduct" laws are in force in at least 15 other states or cities, but not in nearby Virginia or Maryland.

Landlord-tenant disputes in the District are now handled by a branch of Superior Court and the city's Rental Accommodations Office. The Rental Accommodations Office has recommended that the city consider setting up a revolving fund to make low-interest loans to apartment owners to help finance repairs. The RAO said high interest rates and a lack of financing has slowed repairs of rental housing.

Clarke said the city has not enforced its current laws, referring to a recent Judiciary Committee hearing in which an assistant corporation counsel suggested tenants might be better off to sue for improved conditions in Superior Court rather than go through the city's poorly enforced housing code process.

Council member Betty Ann Kane (D-At Large) suggested the city should improve its enforcement of current laws before passing new ones. She said the city could provide more money and staff to city agencies to improve services to tenants.

Because of the pressures of the election year, in which several council members are running for mayor and the terms of seven council members are expiring, both landlords and tenants say council action on the repairs bill may be postponed until after the Sept. 14 Democratic primary.

Weston said tenant groups in several city wards have formed a Tenant Solidarity Union to organize tenants and register voters to fight what they see as the money advantage that real estate brokers, builders and apartment owners have in influencing legislation and political campaigns.

A group of real estate men, builders and apartment owners has already organized a campaign to push candidates in five ward races.