Federal housing officials have reprimanded Baltimore's housing authority for promising more than $17 million in future rent subsidies to developers of a South Baltimore project, bypassing requirements for soliciting competitive proposals.

A spokesman for the Department of Housing and Urban Development's Baltimore area office said yesterday the city's actions were "unfair" and had "shut out the rest of the housing industry . . . limiting the ability to pick the best projects."

Officials of the Neighborhood Progress Administration, the city's housing agency, immediately responded by pulling back its promise of the money for the Brooklyn Apartments in South Baltimore, saying the agency will advertise for other proposals.

The dispute over the $17 million is part of a complicated series of events involving influential businessmen and questions about whether they received favored treatment in the awarding of the funds under what is known as HUD's Section 8 moderate rehabilitation program. The program promises future rent subsidies to developers who rehabilitate housing for low-income tenants, who pay a portion of the rent themselves.

In 1982 HUD's area office in Baltimore was notified by the regional office in Philadelphia that it would receive added rent subsidy funds to be used for a project called "Baltimore Uplift One," according to Thomas R. Hobbs, the Baltimore area manager.

Hobbs said it was unusual for any HUD office to designate that the funds go to specific projects, which are usually selected by a city's housing authority.

Baltimore Uplift One, city and HUD officials said they later learned, was represented by Washington area mortgage banker Bert King. King said yesterday he was representing a group of investors, whose liaison was Robert I. Tuttle. Tuttle works in the consulting firm of Lynn Nofziger, a former top aide to President Reagan.

Tuttle said yesterday that he has "represented several purchasers," including several friends in the Navy, in buying about 220 homes in Baltimore, including eight he owns himself. But he said he never named them "Uplift One" and was not aware they had been designated to receive any federal rent subsidy funds.

King said that 209 of the units had been designated for the rent subsidy program before he came on board to represent the group in the summer of 1983. Hobbs and King both said they attended a meeting around that time in which it was decided that it wasn't feasible to use the units for that purpose.

Later, according to King, he realized that Baltimore had the rent subsidy funds available and that he had other clients who would like to apply for them. These clients were the Baltimore developers who own the Brooklyn Apartments, he said.

HUD's Hobbs said the funds designated for "Uplift One" were reassigned by the city to the Brooklyn project. Stephen Kaiser, spokesman for the Neighborhood Progress Administration, said officials determined there was a need for the project, compared it to other proposals "in our pipeline" and decided to award the money.

By that time, King also was negotiating with the city to sell the 209 housing units, scattered throughout Baltimore, to the housing authority to be turned into public housing -- a project, according to area HUD officials, requiring about $36 million in federal funds.

The money has been set aside by the federal government, but the purchase has been stalled awaiting HUD's approval of appraisals of the property's value, according to a HUD spokesman.

King said the only connection between the 209 units and the Brooklyn Apartments is that "I am involved representing both clients. There is no other connection."

Tuttle said that he has nothing to do with the Brooklyn Apartments. "Not only is it not mine," he said yesterday in a telephone interview. "I never heard of it before."