Business magazine owner William A. Regardie yesterday labeled Mayor Marion Barry's management "a cancer" on the city and called for congressional investigations of the District and its police department even if the probes threaten home rule.

Regardie, in a speech to the downtown Franklin Square Associates, charged that "cronyism and the mayor's increasingly heavy patronage thumb have become a way of life" and have begun to undercut the District police department's fight against crime and illegal drugs.

His bluntly worded speech, which came at an otherwise upbeat event aimed at celebrating the revitalization of a key downtown business area, generally won support from the crowd, which included several members of the D.C. Council.

Regardie, whose monthly magazine focuses on District and suburban business, also suggested creation of a group similar to the Knapp Commission, which investigated police corruption in New York City in the early 1970s. The publisher said the council ought to conduct its own probes but questioned the council's "political will" to stand up to Barry.

Three council members who were in the audience for Regardie's speech at the Grand Hyatt Hotel expressed some agreement with Regardie's criticism, but none specifically endorsed or opposed his call for congressional investigations.

Council members John A. Wilson (D-Ward 2) and Charlene Drew Jarvis (D-Ward 4) said allegations of corruption and increased crime are serious problems, while council member John Ray (D-At Large) said there are "many things we need to do to regain confidence" in the city government.

"People are tired of the inefficiency of the government . . . . People do not understand why things never work," said Wilson, adding that the city has "the people with the ability to get things done."

Barry, in an interview at his office, said Regardie "doesn't know anything . . . . As a journalist he owes it to his readers to at least look at what the city is about."

Barry said that in his nine years in office, Regardie has never been in city meetings with him and has never asked to bring in his editors for interviews and explanations of how the city works. "I think it is a personal vendetta," Barry said.

Council member Jim Nathanson (D-Ward 3), who attended the downtown event, also was sharply critical of the speech, calling it "off the wall" and "basically a harangue against the mayor."

Nathanson said Regardie "referred back to the pre-home rule days when we had a primarily white police force." Nathanson said city services then may have been good for some District residents but not all, particularly minorities.

Regardie, an often provocative businessman whose magazine frequently has criticized the Barry administration, surprised many in the audience with his speech. However, some members of the media were given advance notice of the remarks.

In one of the few exceptions taken to the publisher's remarks, Jarvis told reporters after the speech that she questioned Regardie's timing.

"I think it was a harsh political statement . . . . {It} probably wasn't the best . . . when this business community is trying to enlist the support of the government," Jarvis said.

Regardie's speech came minutes after William C. Smith of the John Ackeridge Co., the 1987 chairman of the business group, had praised the development of the area but said the businesses still needed the District government's help in ridding the area of prostitution.

The Franklin Square Associates was formed in 1983 in an effort to clear out prostitution, sexually oriented businesses and related street crime in the neighborhoods surrounding Franklin Square at 14th and I streets NW near the Washington Convention Center.

Asked later about the timing of his speech before an organization that is seeking help from the city government for more public safety services, Regardie said: "It was the hardest speech I have ever had to give. I had to walk a thin line between trying to get help for the police department and {irritating} the police department."

Federal authorities are investigating allegations of corruption involving the skimming of drugs or cash by a group of 4th District police officers.