The terrorist activities by members of the Hanafi Muslim sect here have revived the age-old debate over government surveillance of private citizens.

Some D.C. police officials and one member of Congress complained yesterday that restrictions on intelligence-gathering activities and hampered police in dealing with the Muslim terrorists.

Officers said they had maintained extensive intelligence files on Muslim sects, including the Hanafis, until about 1974. They said the files were destroyed in the wake of sharp public criticism of police surveillance of political and racial groups.

An official in the Metropolitan intelligence unit said the lack of intelligence had hindered police in their attempts to negotiate with Hanafi leaders.

Rep. Larry McDonald (D-Ga.) went further, in charging in a speech on the House floor that the Hanafis' successful seizure of three buildings was "a direct result of the lack of advancea information" police could have obtained from ongoing surveillance.

D.C. City Councilman Julius Hobson, himself a target of police surveillance in the 1960s, disagreed.

"It's so ridiculous - every time this happens, they're going to say they have to start that business again," Hobson said. "It's fascist; it's like living in Nazi Germany, where they watch you all the time."

The Metropolitan Police, the FBI, and the now-defunct House Internal Security Committee were all watching the various Muslim sects in the 1960s and early 1970s, officials said.

Surveillance aimed directly at the Hanafi group was stepped up following the 1973 murders of seven members of the Hanafi, sect by Black Muslims. A D.C. police official said about six intelligence agents gathered massive files on the group, to help predict specific acts of retaliation the Hanafis were believed to be planning.

Herb Romerstein, a former investigator for the House committee, said the committee investigated the Hanafis and other Muslim groups in 1973.

Romerstein also said that a D.C. police informant had infiltrated the sect in the early 1970s, but was withdrawn following the outcry over surveillance operations.

Police officials would not comment on that claim yesterday. Thomas Herlihy, a retired D.C. policeman who headed the intelligence unit until 1973, said he couldn't discuss the Hanafi surveillance.

"That's too hot to handle," Herlihy said.

Such activities have always caused tension. Police say intelligence gathering people from potential criminals. Civiling is essential to protect innocent libertarians say the invasion of privacy that surveillance implies is as offensive as the criminal activity it is supposed to prevent.

Critics of intelligence operations also say that secret surveillance is one of the most expensive and least productive of investigative techniques.

A report issued by the Metropolitan lance activities supported the critics Police in 1975 on their own surveillance on the point.

The report said that voluminous intelligence files gathered by police on civil rights and antiwar groups here contained "much material which did not prove relevant to subsequent police investigations."

Assistant Chief Theodore Zankers, after his own review of the departments's intelligence files, characterized them as "mostly junk."

One of the subjects of surveillance in 1960s, and a sharp critic of the practice when it was revealed, was City Councilman Marion Barry, who was wounded Wednesday by a gunman in the District Building.

Interviewed at Washington Hospital Center, Barry said he didn't want to comment on the curtailment of surveillance of the sect. "Anything I say might inflame them," Barry said.