The D.C. City Council gave preliminary approval yesterday to a bill designed to eliminate waste and cut down on abuses of competitive bidding rules in the city's troubled purchasing system.

The bill, approved unanimously, represents a hard-fought compromise between council members who urged more drastic changes, and Mayor Marion Barry, who argued for "fine-tuning" the current system.

As originally drafted, the bill would have centralized the city's purchasing operations under one agency -- a move that some studies suggested would result in greater efficiency and better management.

But the bill's sponsor, William R. Spaulding (D-Ward 5), gradually moved from the idea of a centralized system toward what he calls "centralized controls" in the face of the mayor's opposition and a new study that said the District's purchasing needs were too complex to be handled by a single agency.

Spaulding told his council colleagues yesterday that the bill still had its teeth and would "go a long way to restoring public trust in the procurement system."

The council is expected to give final approval to the measure in two weeks, although at least two council members and an aide to Barry said they will be pushing for some last-minute changes before the vote.

The bill as now drafted would:

*Attempt to cut down on the cost of commonly used goods by requiring the various city departments to buy together through contracts arranged by the Department of Administrative Services. An investigation by The Washington Post found last year that because the city failed to combine similar purchases, the city paid an average of 26 to 79 percent more than surrounding jurisdictions for commonly used goods.

*Require the Department of Administrative Services to review all purchases made by the various city agencies for compliance with the city's purchasing regulations. Currently, individual agencies can purchase millions of dollars worth of goods and services with little or no outside scrutiny. The Post investigation found pattern of abuses of competitive bidding rules in the area of purchases under $10,000.

*Cut back on the number of agencies empowered to make "small purchases" of up to $10,000 a day with a single vendor. Reports by groups such as the U.S. Government Accounting Office have suggested that the District agencies overuse and abuse this power. The bill would require the mayor to establish a sliding scale of authority that would eliminate or reduce the small purchase authority of smaller agencies.

*Allow the city to participate in cooperative purchasing agreements that have resulted in substantial savings for surrounding jurisdictions. Comparisons of fuel costs show that the city could save up to $4 million a year if it bought fuel through a cooperative agreement arranged by the Metropolitan Washington Council of Governments.

*Require city officials to develop an automated system for collecting data on what the city buys and how much it pays. The lack of such a system has contributed to the city's chaotic purchasing practices.

*Require the Department of Administrative Services to exercise a degree of control over the city's warehouses. Several studies have shown that the city loses millions of dollars a year because agencies stock the same items unnecessarily.