The U.S. Department of Housing and Urban Development announced yesterday it will not close its Washington field office, a proposal that had been criticized by area officials and the local employes union.

Under the proposal, most of the field office's responsibilities would have been divided among HUD offices in Baltimore, Richmond and Philadelphia. Local officials had opposed the plan, saying it would fragment federal housing efforts in the region.

They had said it would probably mean fewer housing funds for the area, because the various jurisdictions would have to compete with other parts of Virginia and Maryland for funds flowing through offices that lacked an understanding of Washington-area needs.

District of Columbia housing programs would have been handled through three different offices depending on the type of program, according to local officials and the union, the American Federation of Government Employees Local 3796.

The HUD announcement said that Kenneth J. Finlayson, HUD's mid-Atlantic regional director, had decided not to recommend a reorganization of the Washington field office because the estimated cost savings would not warrant it.

However, the field office will be moved from its current location at 1875 Connecticut Ave. NW to vacant space at HUD headquarters at Seventh and D streets SW.

On a related issue, D.C. City Council Member Charlene Drew Jarvis (D-Ward 4) said she was dismayed by reports that the Reagan administration will propose deep cutbacks in funds for public housing and elimination of eight housing and urban aid programs.