Three District taxi companies have settled a discrimination lawsuit by agreeing to monitor whether their drivers are passing up black residents or refusing to take them to some neighborhoods.

The settlement represents the first legal breakthrough on the issue of discrimination in cab service, according to the lawyers' group that brought the suit in 1989 and announced the agreement yesterday.

Black residents have long complained that cabdrivers routinely pass them by or refuse to take them to some neighborhoods.

Under the agreement, approved late Thursday by U.S. District Judge Charles R. Richey, the three cab companies named in the suit must investigate and keep records of both formal and informal complaints from people who allege discrimination on the part of drivers who use the companies' cabs.

The settlement requires that when the companies find that service was denied at least partly based on race of the customer, they suspend the driver's insurance and driving privileges for a week for the first offense, 12 days for the second and permanently for the third.

Cabs owned by the three companies -- American Cab Association, Empire Cab Inc. and D.C. National Cab Co. Inc. -- also will be required to display decals on windows and rear bumpers that show phone numbers to call to file complaints.

But whether the settlement will have industry-wide impact remains to be seen because the companies that were defendants in the civil rights lawsuit operate only 300 of the 7,000 cabs in the city.

The lawsuit was filed in June 1989, a year after a study commissioned by the Washington Lawyers' Committee for Civil Rights Under the Law found that blacks in Washington were almost seven times as likely as whites to be passed by while trying to hail a cab.

In March, Richey ruled that the cab companies could be held liable for the discriminatory actions of their drivers. Negotiations on a settlement followed that ruling.

People interviewed yesteday who use cabs in the District said they were glad to hear that the problem is being addressed, but some doubted that the new complaint process will help black males hail cabs more successfully.

"I understand that cabdrivers have to protect themselves, but they have a job to do," said Madison Hayes, 28, who is black. "It's not going to make it easier to get a cab. The drivers will still stereotype all young, black males as some kind of troublemakers. They've got to realize that all of us weren't brought up to be that way."

Cabdrivers interviewed, none of whom worked for companies named in the lawsuit, said that most drivers pass by people not because of race but because of financial and safety factors.

"It is this simple," said Abdul Mushee J. Saafir, who has driven a cab since 1979. "Most drivers prefer to work downtown because they can make more money."

Owners of the three cab companies named as defendants had varying responses to the settlement.

Andrew Schaeffer, owner of American Cab, said there is a problem with city cabdrivers passing up potential passengers who are black and refusing to take people to some predominantly black neighborhoods. However, he said that economics and safety also account for the actions of some drivers, about 90 percent of whom, according to Schaeffer, are black or foreign.

"It is very easy for us to sit in our offices and say take this passenger to Anacostia," Schaeffer said. "But we just had a driver killed six or seven weeks ago during a robbery. What lawyers group speaks for him?"

Altaf H.S. Gilani, who owns Empire Cab, signed the settlement but said he still believes that his company should not be liable for wrongs committed by people driving his cabs. "We have no control over cabdrivers," he said. "They are only using the company name, and we provide insurance for them."

Nevertheless, Gilani said his company would abide by the settlement, something he doubts that other cab companies in the city will do voluntarily. "The other companies are not worried that much about it," Gilani said. "They don't care about it."