Montgomery County officials, citing legal and financial uncertainties surrounding the county's cable television system, last night withdrew a proposed agreement in which the cable operator had promised to iron out major problems in the system to resolve a flood of consumer complaints.

Alexander J. Greene, staff assistant to County Executive Charles W. Gilchrist, made the surprise announcement in testimony before the County Council, which held a public hearing on the agreement in Rockville.

The move was necessary, Greene said, because the troubled system, operated by Tribune-United Cable of Montgomery County, recently failed seven performance tests contained in the county's contract with the company. The agreement was predicated on the system passing the tests, he said.

Greene also said plans by the cable system's parent, the Tribune Co., to sell it's cable television holding had created legal uncertainties that made the execution of the agreement unwise at this time.

John T. Schmuhl, vice president and general manager of Tribune-United, said his company planned to move ahead with the proposed changes even without the agreement, but his statements did little last night to allay the confusion created by the county's action.

"This just creates more frustration and it certainly creates more confusion," said County Council President Michael Gudis.

"This comes as a total shock," said council member Esther Gelman. "This system has serious problems."

The county's cable system has received a growing number of complaints about the quality of service from consumers who have subscribed to the 10-month-old system. The agreement, a product of months of negotiation between the company and the county, was designed to answer the three largest consumer complaints.

As part of the agreement, known as a memorandum of understanding, Tribune-United promised to provide a device for $5 so users could watch one program while taping another channel with a video tape recorder, and a free key pad so users could switch directly to a station instead of scrolling through all channels.

The company also agreed to place fire-hydrant-size electronic switching boxes underground in neighborhoods where all other utility service lines are underground.

Schmuhl said last night that the system's problems are technical in nature and failed the tests because of a faulty electronic component that "costs two cents."

"The evidence is that there are thousands and thousands of people who are satisfied with the system," he said.

More than 14,000 county residents subscribe to a cable system that is linked by 900 miles of wire. The system will ultimately have more than 50,000 subscribers and 2,000 miles of wiring, Schmuhl said.