Maryland House of Delegates Speaker Benjamin L. Cardin, charging that the state's Division of Correction is riddled with "incompetence from top to bottom," said yesterday that the legislature should deny the department part of its operating budget until prison officials submit a comprehensive plan for upgrading state prison facilities.

Cardin, at a meeting with reporters and editors of The Washington Post, also said the administration of Gov. Harry Hughes is not going far enough in its plans to renovate the Maryland Penitentiary in Baltimore, and he advocated that the aging maximum security facility be torn down and replaced.

Cardin's position that the penitentiary be rebuilt puts him at odds with Hughes, who reiterated his view yesterday that a substantial renovation of the prison is an acceptable solution to the physical deficiencies of the facility, parts of which date to the early 19th century.

The major cellblock wings of the penitentiary were constructed in 1894, and the prison is widely regarded as outmoded by modern correctional standards and overcrowded. One wing, housing the prison system's most violent and disruptive inmates, was described in a recent attorney general's report as a place where violence is endemic, contraband flows freely and security is "in disrepair or nonexistent."

Citing previous instances in which the Division of Correction has failed to spend funds appropriated for capital improvements at the prison, Cardin said, "We don't have any confidence that because the governor says he is going to renovate the Maryland Penitentiary that it is going to be done. So we are going to insist on a facilities plan. And we might go beyond the governor, we might put more money in the capital budget than the governor wants."

Hughes, speaking at his regular news conference yesterday, said he will put funds in his fiscal 1986 budget to plan "various significant renovations" of the penitentiary, where the October killing of a guard provoked an extremely critical report by Maryland's attorney general on conditions in the prison's segregation unit.

An aide to the governor said that although plans are still not final, the renovations would involve the demolition of some of the dozen buildings on the prison site and could cost anywhere from $20 million to $50 million. Total replacement of the penitentiary would cost more than $100 million, said corrections aide Wayne McDaniel.

McDaniel said plans for the Baltimore prison would also include the construction of new floors in two of the penitentiary's five-story cellblocks that house the most troublesome inmates and replacement of plumbing and electrical systems. "It would not be a paint and powder renovation," said McDaniel. "We are talking quite substantial changes."

Because of the Divison of Correction's previous failure to spend appropriated funds for renovations, said Cardin, the legislature should "embargo" a part of the prison budget until officials present a detailed plan for improving not only the penitentiary but other facilities, such as the House of Correction in Jessup.

The Baltimore Democrat, who is planning to run for governor in 1986, suggested the legislature should hold up as much as 50 percent of the corrections budget until officials submit a capital plan that is approved by the General Assembly's budget committees.

"It's the only alternative we have," said Cardin. "We don't use it very often; we only use it when we think it is serious enough . . . . The corrections department situation is serious enough."

"The problem in the Maryland Penitentiary and the Division of Correction is much deeper than facilities," argued the House speaker. "It's a lack of discipline, a lack of chain of command, a lack of commitment, a lack of programs, all stemming from incompetence from top to bottom." Cardin said, however, that the state's new correction commissioner, Arnold Hopkins, has made a good beginning in improving the division.

Cardin also said there are enough votes in the House of Delegates to demand that the penitentiary be replaced, but there is disagreement on whether it should be rebuilt on its current site or at a new location.