Prince George's County students who took the latest California Achievement Test scored above the national average in grades five and eight, and equaled it in grade three, county school officials announced this week.

Meanwhile, 99 percent of the county's 12th grade students have passed the Maryland Functional Reading Test.

For the first time this year, Maryland high school students will not be allowed to graduate until they have passed the reading test, which examines a student's ability to read and understand written material such as road signs and application forms. Students who fail are allowed to retake the test as many times as necessary.

After a trial run in grade seven, students get their first chance to pass the reading test in grade nine. Last fall, 76 percent of the county's ninth graders passed. (In Montgomery, 92 percent of the ninth graders passed the test, according to school spokesman Kenneth Muir.)

Prince George's school officials expressed delight at the results of both tests.

"I'm feeling good about the emphasis on basic studies we have had for three or four years," said Louise F. Waynant, director of instructional services for the county schools. "It's showing good returns."

The strongest results in the achievement test were in the "language mechanics" section, where students in grades three, five and eight rated between five and nine months ahead of the national average. The weakest performance was in reading, where Prince George's students lagged by about a month.

Compared to a year ago, the overall performance of county students improved in grades three and five, and remained the same in grade eight. The results, Waynant said, showed "that we are on the right track." She added that the testing "shows you where your weak points are."

The California Achievement Test covers a wide variety of subject matter.

Wayant said detailed examination of the data showed "inferential and higher-level thinking, and vocabulary are the weakest." This means, she said, that teachers will have to re-evaluate their teaching methods in these areas and get students to analyze what they read more frequently.

Elwood L. Loh, coordinating supervisor of evaluation and research, said the school system should examine the schools with above-average scores. "Something is happening there," he said, "and we can look at that school and maybe find something we can take to another school."

All schools in the county are required to formulate "action plans" to strengthen the weaker academic areas.

But Waynant said that instant improvements are hard to achieve. While poor vocabulary knowledge could be helped by vocabulary drills at the beginning of classes, she said, "reading comprehension is one of the most stubborn areas to move in the world, because you are measuring the thinking process. . . . You are dealing with abstract thinking."

Jack N. Cole, supervisor of reading for the schools, agreed with Waynant and said that the improvement in reading scores was a good sign. He said he was "pleased, and challenged" by the results which, he added, should "encourage the schools to get above average."

Schools spokesman Brian J. Porter summed up, "We have good stability, some growth, and we are on an overall par" with other schools in the country.