District Mayor Marion Barry yesterday abandoned his effort to raise District income taxes, retreating on the issue for the second time this year in the face of almost certain defeat before the D.C. Council.

Barry's decision to drop his proposal for a $17.9 million tax increase -- which would have meant an increase of from $12 to $100 for each taxpayer -- forced a major revision in the midyear budget he submitted to the council last month and strongly defended just two days ago.

Instead of raising taxes, Barry promised yesterday to curb government spending by as much as $24 million before the current fiscal year ends Sept. 30. Also, he said he will apply as much as $15 million toward reducing the city's long-term deficit -- a move that likely would avoid a confrontation with congressional committees upset by Barry's earlier suggestion that he might not make a payment this year.

The revisions will not result in a reduction in city government programs or layoffs of workers, city officials said, although some unfilled jobs will remain vacant longer. "This agreement is an example of positive leadership . . . . {The cuts} will be accomplished by means of more intense monitoring of the across-the-board expenditures," Barry said in a statement.

"It's clear to me that {the mayor} saw the handwriting on the wall," said Council Chairman David A. Clarke. On Wednesday, Barry rebuffed Clarke when Clarke suggested that the mayor submit a revised budget without a tax increase. Council members had identified budget cuts and had made it clear that they intended to go forward with them.

Barry's action on income taxes is a victory for council leaders, including John A. Wilson (D-Ward 2), chairman of the Finance and Revenue Committee, who has pressed Barry to control spending rather than raise taxes.

Also, it means that Barry has given up on obtaining any of an estimated $300 million in windfall revenue that could have been collected in the next five years from changing the city's income tax system to conform with the revised federal system. In February, Barry abandoned hopes of collecting about $150 million in higher income taxes in 1988 through 1991.

As part of the revised plan, Barry said, he will seek to raise $20 million through a tax on long-distance telephone calls, rather than the $11 million he earlier had sought from such a tax. The increase likely will mean higher rates for business and residential customers of long-distance telephone services, but officials noted that the levy would replace a tax that was ruled invalid after the breakup of AT&T.

"We've had a wonderful year. I'm really overjoyed that everybody has arrived at {this} conclusion," said Wilson, who along with Clarke and other council members said Barry had not made a case for higher taxes in his budget, which totals about $2.5 billion.

Barry, Clarke and Wilson met for about an hour yesterday to agree on the outlines of the revised budget plan that Barry submitted late yesterday.

Barry later left on a four-day trip that includes a stop in Nashville for a meeting of the National Conference of Mayors. Barry is to return briefly to Washington on Monday to attend his son's birthday party and then go to Atlantic City, N.J., that night to attend a boxing match, before returning to Nashville on Tuesday and Wednesday.

Several city government officials said yesterday that Barry suffered his second defeat on a crucial budget matter partly because he has been distracted by a series of issues this year, including a federal probe of city government contracting, and because the post of deputy mayor for finance has been vacant for more than a year.

The budget revisions, which must be submitted to Congress as well, will be reviewed by the council in the next several weeks. The council is scheduled to begin its summer recess next month.