D.C. Mayor Marion Barry yesterday modified his controversial plan to end a $14 million assistance program, proposing a new safety net for some people who cannot work because of mental and physical disabilities.

The modified program would provide aid for more than 1,700 people who would have lost public assistance under the mayor's original budget plan, Barry estimated yesterday.

The new proposal would cover disabled people who are denied benefits from the federal Supplemental Security Income program, a group expected to number about 1,275; individuals with temporary mental disabilities that keep them from working, and some 500 persons who would be grandfathered in for help in fiscal 1984 only.

At the same time, Barry proposed a new "payback" requirement for people who receive city aid while waiting for SSI benefits to come through. SSI payments are retroactive to the date of application, so currently people may receive double payments for the interim period, Barry said.

That new requirement would save the city $1.3 million, he estimated.

In his fiscal 1984 budget announced last month, Barry proposed eliminating General Public Assistance (GPA), the city's main form of aid for about 5,500 unemployed and disabled people, and folding about $6.6 million into a more limited emergency assistance program.

That original plan was attacked by community welfare groups and members of the D.C. City Council, who said it was unacceptable. Council member Polly Shackleton (D-Ward 3), chairman of the council's human services committee, demanded an alternative plan.

City officials had said some current GPA beneficiaries should be eligible for the SSI program and that others would be eligible for emergency assistance.

But council members argued that GPA is the only safety net for many people who cannot receive SSI because their disabilities are not total and permanent.

In a letter to City Council Chairman David A. Clarke yesterday, the mayor cited further analysis since he submitted his budget on Jan. 10 in coming to the same conclusion.

For example, Barry said an analysis of 45-to-55-year-old women on the GPA rolls found a large number with disabilities that are not severe enough to qualify them for SSI but which would be "sufficient to render them chronically incapable of work."

Barry nonetheless defended the intent of his original proposal, and said the modified version retains the basic thrust of that plan.

"I do not believe that we need, or can afford, the current temporary assistance program," Barry said in his letter, adding that costs should be reduced "through improved management, more aggressive appeals for Social Security denials, mandatory treatment of temporary physical disablities and more careful eligibility review and administration."

Shackleton said it would not be possible to include the new proposal in her committee's budget submission this week but that "additional funds will be made available" for some kind of safety net program of this type.