A man who claimed that his wife had set him up for an arrest on drug charges held the couple's two children hostage at gunpoint for three and a half hours in a Southeast Washington apartment yesterday before police stormed the scene and arrested him.

No injuries were reported, but tension mounted throughout the ordeal as the man, identified by D.C. police as Rayvon Harris, 32, an unemployed construction worker, appeared periodically on the apartment balcony, using his 5-year-old son and 3-year-old daughter as shields.

Harris, who was armed with a .32-caliber revolver, held the children in the home of his cousin, Mark Wilson, in the Ambassador Square housing complex at 2900 Douglas St. SE.

The siege started at 12:30 p.m. when police received a call from Harris threatening to kill his children unless he got media coverage.

In three subsequent telephone conversations arranged by police with Channel 5 reporter James Adams, Harris said he believed his estranged wife Gertrude Cannady had conspired with undercover narcotics policemen to have him arrested for possession of cocaine and an illegal firearm. Police said Harris was arrested on such a charge last month.

According to Adams, Harris wanted Cannady to appear on camera and describe the alleged conspiracy. Harris also wanted cameras present for his own safety when he surrendered, Adams said later.

The woman did not appear on camera. Using a police loudspeaker, she attempted unsuccessfully to convince Harris to surrender. Police then contacted him by telephone.

At the height of the negotiations, just as police had convinced Harris to come out onto the balcony one more time, Wilson slipped through a barricade and began to question his relative.

Police frantically tried to wave him away, but Wilson pressed his cousin relentlessly.

"What the hell is wrong with you, man?" he asked. "Throw that damn gun down." Suddenly, Harris dropped the gun. Instantly, police officials broke into the apartment and apprehended him on the balcony.

He was charged with kidnaping while armed and held pending arraignment today.

Crowds of teen-agers and young adults gathered to watch the scene, some shouting at police and making references to Vincent Alexander Dark, who was slain by police last week after he allegedly gunned down rookie police officer Robert K. Best. Dark, who was buried yesterday, lived in the same building in which yesterday's incident occurred.

After Harris was arrested, police moved in on the crowd and dispersed them.