Secretary of State George P. Shultz joined D.C. and U.S. law enforcement officials yesterday in opposing any relaxation of the law that prohibits most demonstrators from protesting within 500 feet of embassies.

In a letter to D.C. Council Chairman David A. Clarke, Shultz said that he is "deeply concerned" about efforts to alter the law by reducing the distance limit to 100 feet.

"Such a change, at the very time when we are urging other governments to increase security for our diplomats abroad, could place our diplomats at risk," Schultz wrote, citing the reciprocal nature of many security agreements.

Continuing demonstrations at the South African and Soviet embassies have highlighted the 500-foot rule, which the American Civil Liberties Union and others have argued interferes with the constitutional right of free speech. The Supreme Court has agreed to hear a challenge to the law brought by the Conservative Action Foundation.

A three-judge panel of the U.S. Court of Appeals for the District upheld the statute last August, with Judge Robert H. Bork -- now under consideration as a nominee to replace retiring Supreme Court Justice Lewis F. Powell Jr. -- writing the majority opinion.

Last year, Congress advised the city to review the 1937 law, and rejected an effort led by Sen. Charles E. Grassley (R-Iowa) to attach a repeal of the 500-foot rule to the Omnibus Diplomatic Security and Antiterrorism Act of 1986.

Clarke said yesterday that the council has agreed to consider a measure reducing the limit to 100 feet, but added that there are no assurances such legislation would survive congressional scrutiny. "There is no sure victory in sight either way we go," Clarke said.

Arthur B. Spitzer, legal director of the ACLU of the National Capital Area, asked the council at a hearing yesterday to act on the measure before the Supreme Court rules so as to render any court action moot.

The existing law, he said, is a "500-foot, no-insult law" because it applies to demonstrations that take place in or around any building where a foreign dignitary is present, including hotels and office buildings. "The law is an example of gross overkill," he said.

Council member Jim Nathanson (D-Ward 3), whose ward includes Embassy Row, said the violent outbursts that law enforcement officers worry about could happen with or without the law, but seldom do.

"As one who has demonstrated 500 feet away, I have to say to you it makes me feel relatively impotent," said Nathanson.

"You can barely see the building you're demonstrating in front of. And the people in the building can't hear you."

Clarke also questioned the selective enforcement of the 500-foot rule, citing instances in which Jewish protesters have been prosecuted for demonstrating within the limit at the Soviet Embassy, while charges have been dropped against thousands of protesters arrested at the South African Embassy.