The D.C. City Council last night narrowly defeated a move to pass a no-fault auto insurance bill and instead gave preliminary approval to a controversial measure requiring all vehicle owners in the city to buy liability insurance.

Under the insurance measure, an amended version of a bill sponsored by Council member Wilhelmina Rolark (D-Ward 8), motorists would have to show proof of liability insurance coverage before registering a vehicle in the District.

The District is one of the few jurisdictions in the country that does not require vehicle owners to carry some sort of insurance, and the council has considered various proposals to deal with the issue over the last several years. Currently, between 40 percent and 60 percent of the 250,000 vehicles registered in the city are not covered by insurance, city officials estimate.

The bill is scheduled for final action in two weeks, but several council members who indicated that they were concerned about the high cost of the measure to city motorists said last night that they intend to offer further amendments.

Sharpest criticism of the the measure last night came from a spokesman for Government Employees Insurance Co., which writes more than 30 percent of the auto insurance policies in the city.

"People will be paying three times the amount they are paying now if this goes through," said August Alegi, a Geico vice president and the firm's chief lobbyist.

Under Rolark's initial proposal, motorists who did not have insurance would have been required to pay a penalty fee of $250 per vehicle each time it was registered for new tags. The change in the bill eliminating the penalty fee and requiring compulsory insurance came in the form of an amendment offered by Council member John A. Wilson (D-Ward 2). It was approved by voice vote.

The Rolark bill was strongly supported by the city's organization of trial lawyers, who had argued that a no-fault law would deprive citizens of the right to sue over auto accident claims. Many of them packed the council chamber last night wearing bright yellow "Citizens Against No-fault" buttons. No-fault supporters, who displayed a list of 38 organizations in their favor, appeared to be vastly outnumbered in the chamber.

The lawyers have led a spirited campaign to block the no-fault measure--proposed last year by Council Chairman Arrington Dixon--which essentially would have required that all vehicle owners carry insurance and that all personal injury claims resulting from auto accidents, except in extraordinary cases, would be paid by the injured person's own insurance company.

The bill was cosigned last summer by eight other council members, but earlier this year many of the cosigners refused to back the bill publicly. Last night, three of them--Charlene Drew Jarvis (D-Ward 4), Jerry A. Moore (R-At Large), and William R. Spaulding (D-Ward 5)--voted against Dixon's bill, which was defeated by a vote of 7 to 6.

The council last night also gave final approval to a bill that would allow uniformed city police officers to work up to 24 hours each week at part-time security jobs. Supporters saw the measure as a way of combating crime in the city, while opponents had argued that the bill would hurt the private security firms in the District, which mostly employ city residents, while giving jobs to police officers, about 80 percent of whom live outside the city.