Alexandria City Councilman Donald C. Casey, reacting to opposition from the local business community, has agreed to narrow the scope of a controversial proposal requiring businessmen dealing with the city to first complete a tough financial disclosure statement.

As amended, the proposed legislation would require anyone bidding on city-owned land or seeking a contract to provide services to the city to disclose any financial relationship, even if unrelated to the contract or property, with City Council members, the city manager, the city attorney or their spouses.

The original proposal required businessmen to disclose any financial interest with all city employes and immediate family members of city employes.

It was the original version, given preliminary council approval in October, that alarmed the business community, which viewed it as a major obstacle in doing business with the city.

"I didn't want to ram it down the throats of people doing business with the city," Casey said yesterday. "I wanted something they could understand or at least not oppose."

Casey sponsored the legislation in an effort to avoid future conflicts of interest such as one that arose last spring and led to the resignation of Vice Mayor James P. Moran. Moran pleaded no contest to a misdemeanor charge after a special prosecutor charged that he accepted favors from a man who had bid on the purchase of a city-owned lot.

Casey's action followed a meeting Wednesday with representatives of the Alexandria Chamber of Commerce.

Casey said the businessmen expressed concern about potential abuses that could arise under the original requirement if bidders for a city contract sought to publicize financial or business ties between their competitors and relatives of city officials that may have been overlooked or even unknown to the person seeking the bid.

Casey said he will ask the council to defer final action on the proposed legislation until Nov. 27.