There will be no jail cell and no secure hospital room for DeWitt Stith, a mentally retarded District man who police said admitted sexually assaulting a 12-year-old boy in January.

Yesterday, after five months in custody, he went free.

The U.S. attorney's office, blocked from putting Stith on trial because he is unable to comprehend his surroundings, assailed a D.C. law that allows the mentally ill -- but not the mentally retarded -- to be committed to secure psychiatric institutions.

Prosecutors, citing a 1994 slaying and at least three rapes since 1995 allegedly committed by mentally retarded D.C. residents who went unpunished, said they will press the D.C. Council to change the law. A council source said the issue will be reviewed.

Stith grew up in Forest Haven, the city's ramshackle asylum for the retarded, and more recently was hounded by a sexual predator in a District group home. At age 52, he moved yesterday to a different group home, where he will be one of four residents and will be supervised round-the-clock.

"There will be someone assigned to him every minute," said Madelyn Andrews, spokeswoman for the D.C. Department of Health, which oversees the District's 150 taxpayer-financed group homes for the retarded. Someone will be with Stith constantly, inside and outside the home, Andrews said.

Stith's placement in the facility shows that the District is equipped -- without a change in the law -- to handle troubled mentally retarded residents who are perceived as a danger to the community, his attorney said yesterday.

"Is it safe to protect the community? Yes. Four folks, 24-7 supervision. It doesn't look like a jail or a hospital because it doesn't need to," said Laura Rose, a lawyer with the D.C. Public Defender Service.

"The way in which they're claiming that Mr. Stith is dangerous," Rose continued, "is that, by virtue of his limitations, he's without understanding or knowledge to limit his own actions. That type of dangerousness does not require force to restrict it. It requires supervision."

The U.S. Justice Department's civil rights division is investigating the quality of care in the city's group homes after a March report by The Washington Post that cited 350 documented cases of abuse and neglect, as well as severe profiteering and poor government monitoring of the 1,100-resident group home system.

Last month, a federal grand jury indicted Denise Braxtonbrown-Smith, one of the city's largest providers of services to the mentally retarded, on charges that she cheated the city out of $1.6 million. In 16 felony charges, she stands accused of spending money intended for retarded adults on such personal luxuries as a grand piano, a pool table and catered parties.

Stith repeatedly tried to escape the rats and the predator who shared his bedroom in a group home. He would stand in the street and fake seizures, sometimes earning a trip to a hospital where he received care that pleased him. When returned to the home, he grew angry, once badly beating an elderly roommate.

In January, Stith escaped from a van taking him to a job he detested, cleaning stables for a group home provider whose farm-labor program has since been shut down by the District. One day after Stith fled, D.C. police charged that Stith assaulted and raped a 12-year-old boy. A detective said in an affidavit that Stith admitted the crime.

Stith was charged with two counts of first-degree child sexual abuse. A D.C. Superior Court judge ordered him held without bond pending trial, on grounds that he posed a danger to the community. In May, a mental health panel deemed him incompetent to stand trial and unlikely to become competent.

Assistant U.S. Attorney Peter V. Taylor announced yesterday in court that the charges would be dropped and that Stith would be released. He relayed word to the 12-year-old's mother and said she struggled to understand how Stith could go free.

Prosecutors, including Senior Assistant U.S. Attorney Colleen Kennedy, contend that District law needs to be changed to permit the secure confinement of mentally retarded residents who are considered a danger to themselves or others. Current law applies only to the mentally ill.

"It's a problem," Kennedy said. "It doesn't happen that frequently, but when it does, it's a serious crime.

In September 1995, prosecutors released Bernard Eaton, a mentally retarded man who police said admitted that he had strangled his roommate in a D.C. group home. He allegedly told a group home director and a St. Elizabeths Hospital staff member that he killed Reginald Lovette because he snored too loudly.

Eaton was ruled incompetent to answer a murder charge. When prosecutors sought to confine him to a psychiatric institution on grounds that he was mentally ill, a jury concluded after a two-week civil trial that he was not. Released to his mother, Eaton is now working a regular job and doing "absolutely fine," said Walter A. Smith Jr., special deputy corporation counsel.

In the aftermath of the Eaton case, the U.S. attorney's office sought to change the D.C. law. Kennedy said yesterday that prosecutors made the case, but the D.C. Council "just didn't act." Council member Jack Evans (D-Ward 2) countered that prosecutors during the tenure of then-U.S. Attorney Eric H. Holder Jr. did not push hard.

"We met with Eric Holder, who gave us a number of pieces of legislation. This was one of them," said Evans, who chaired the council's judiciary committee from 1997 to 1999. "That is the last we ever heard from them."

CAPTION: Police said DeWitt Stith admitted sexually assaulting a 12-year-old boy.