D.C. City Council member John Ray (D-At Large) introduced a bill yesterday to repeal the city's no-fault auto insurance law, reopening debate on one of the most hotly contested issues to come before the council in recent years.

Ray, a longtime opponent of no-fault, proposed that a commission be formed to study the issue of mandatory auto insurance for two years and make a recommendation for new legislation.

In the meantime, under Ray's proposal, the owners of the estimated 100,000 uninsured vehicles in the city would be charged a $400 penalty each year to encourage them to buy insurance--a system similar to Virginia's current law.

Ray called the current no-fault law, now scheduled to go into effect Oct. 1, "a cesspool of bad ideas." He said his bill would give the city "a common-sense system of auto insurance."

Supporters of the no-fault law quickly criticized Ray's move as an effort to undermine mandatory insurance in Washington.

"The battle was fought, the battle was won," said Betty Ann Kane (D-At Large), a leading supporter of no-fault insurance. "It substitutes a good no-fault system for one that will cost drivers twice as much."

But some lobbyists for insurance companies--which generally have supported the idea of mandatory insurance--said yesterday that they are unhappy with some rate-setting provisions of the current law, which they said were put in by opponents of no-fault in an effort to weaken the measure.

Grover Czech, a vice president of the American Insurance Association, which represents 165 insurance companies that write a total of about 25 percent of the insurance policies in Washington, said his organization is working on possible changes in the law.

The auto insurance measure was passed last summer after months of bitter political maneuvering and unprecedented lobbying campaigns by insurance firms supporting no-fault and trial attorneys opposed to it.

The law would require D.C. motorists to purchase auto insurance in order to renew or purchase license tags. Under the no-fault provisions, personal injuries of up to $100,000 would be paid by each driver's own insurance company without determining which driver caused an accident. Property damage would not be covered under the no-fault provisions.

Motorists would lose their right to sue for personal injury damages unless claims exceeded $5,000.

The measure was to have gone into effect April 1 but Mayor Marion Barry said his administration was not prepared to enforce the law and the council granted a six-month delay.

Barry, who previously has said he would veto any council measure that repeals no-fault, yesterday declined to comment on Ray's proposals.

Donald J. Chaikin, president of the local trial lawyers' association, told his members in a recent letter that the postponement of no-fault "was a major development. Your association has never ceased in its efforts to see the absolute defeat of this onerous piece of anticonsumer legislation."

Meanwhile, Woodrow Boggs, a lawyer and close adviser to council member and no-fault opponent Charlene Drew Jarvis (D-Ward 4), has registered as a lobbyist for Chaikin's group, the Association of Plaintiffs Trial Attorneys of Metropolitan Washington D.C., according to a spokesman for the city's Office of Campaign Finance.

Ray, whose consumer and regulatory affairs committee will have jurisdiction over his measure, said he hopes to bring the bill to the full council by early May. He said his five-member committee, which includes only one supporter of no-fault, will schedule hearings on his bill soon.

Only four of the council's 13 members are considered strong supporters of no-fault, a dramatic change from a year ago, when nine members said they supported some form of no-fault.