A group of consumer advocates and insurance company representatives plans to begin collecting signatures today for a proposed referendum that would preserve the District's mandatory no-fault insurance law, which is scheduled to become optional under legislation that would take effect next month.

The signature drive was authorized yesterday by the D.C. Board of Elections and Ethics, which removed the last legal obstacle to the effort by rewording the proposed referendum.

D.C. Superior Court Judge Sylvia Bacon ordered and participated in the revision of the referendum after a daylong hearing on several legal challenges to the referendum. Bacon said that the original language approved by the elections board had not adequately stated the purpose of the existing no-fault law or the effect of the amendments adopted by the City Council in November.

The referendum proposal is designed to repeal pending changes in the city's current mandatory no-fault insurance coverage, which compensates accident victims for medical expenses regardless of who is at fault. Coverage would become optional under the council amendments, which become law after a congressional review period next month.

The legal challenges filed last month by several District residents alleged that the elections board had failed to give proper public notice of plans to consider the proposed referendum. They also claim that the board had approved improper referendum language and had no right to consider the matter because an earlier U.S. District Court ruling declared a portion of the mandatory no-fault law unconstitutional. That ruling has been appealed.

Bacon agreed only that the board should reword the referendum proposal.

Fredric W. Schwartz, a lawyer who filed one of the challenges, said he would appeal the judge's decision and maintained that even the new referendum wording is not a full description of what would happen if the measure is adopted.

To suspend the congressional review period on the no-fault amendments and force the District to have a citywide referendum election, the referendum supporters must collect 13,000 signatures and present them to the elections board by Feb. 11.

Larry Mirel, the attorney representing the referendum backers, said, "I am somewhat concerned about the shortness of time." He said his clients have set a goal of collecting 26,000 signatures to make certain that at least half of them are registered District voters.

If the petition drive is successful, elections board Chairman Edward W. Norton said a special election would have to be held by early July. The results of such an election would be binding on the City Council for a year.