D.C. police are investigating allegations that two District women arrested in connection with a squatters campaign on Wednesday were strip-searched at Third District headquarters.

Police spokesman Lt. William White III said last night that police could neither deny nor confirm the strip-search charges, but that an investigation was under way as "part of a standard department policy when allegations of this type are made." White said that he notified Assistant Police Chief Isaac Fulwood Jr., and that a captain for the Third District began calling in officers last night and interviewing them about what had taken place.

The two women, Jacqueline Dyson and Ernestine Turner, and three men were arrested after they entered two vacant houses owned by the District on University Place in Northwest Washington. All five were participating in a squatters campaign backed by the Association of Community Organizations for Reform Now (ACORN), a local advocacy group. All five spent the night in jail and were released yesterday after the charges of unlawful entry were dropped, according to their attorney.

Dyson said she and Turner were strip-searched in the Third District police station hallway by a female officer. They were asked to remove their pants and squat while the officer conducted a visual search, Dyson said.

The three men arrested with Dyson and Turner were not strip-searched, one of the men said.

Dyson said she told her attorney, David Niblack, about the alleged strip-searches but said she has not decided whether she will file a complaint.

"We were both so humiliated," said Dyson. "In the hallway and all, any man could have come around the corner. I said 'do we have to go through this' and she said 'I want to check to see if you have knives or guns or dope or anything.' "

After the search, Dyson said the officer noticed that Turner was wearing an ACORN button.

"She never apologized to us but she raised hell with the guys officers for not telling her we were with ACORN," said Dyson.

White said police also are trying to determine whether the five were released in a timely fashion. The program under which they sought to be released, the citation release program, usually takes a couple of hours, White said. But the five, who were arrested before 7 p.m. Wednesday were not released until 6:30 a.m. yesterday.

White said that he was told that the women were searched in an area near holding cells. He said it had not been determined whether the women had been asked to remove their clothing. He said he would not speculate on whether the charge of unlawful entry, a misdemeanor, would warrant a strip search.

White also said police policy is to conduct a strip-search when officers have reason to "suspect that weapons, contraband or evidence is being concealed" and would not be discovered during a routine pat-down search. White also said police policy requries that strip-searches be conducted "under secure conditions affording privacy."

The District began following that court-ordered policy after a 1981 lawsuit filed in U.S. District Court by Mary Morgan, wife of Dr. Benjamin Spock. Morgan was arrested and ordered to undergo a strip-search after she and 11 others protested the Reagan administration's proposed budget. Morgan was charged with unlawful entry onto the White House grounds.

Dyson said she will continue her plans to claim squatter's rights to the vacant house on University Place.

"After all I went through I feel like I've paid $100,000 for that house," she said.