Reacting to reports of high levels of cancer-causing asbestos fibers in rock quarried in Montgomery County the Maryland Health Department yesterday proposed emergency restrictions on the continued use of such rock in roads, playgrounds and driveways around the state.

The regulations, if approved by a legislative subcommitte would prohibit the use of serpentine rock as a surfacing material unless it is sealed or covered to prevent inhalation of the asbestos fibers. Maryland would become the first state to restrict use of the rock which is found up and down the East Coast.

Concern about the rock first surfaced last fall when Dr. Irving J. Selikoff, the nation's leading asbestos expert reported that asbestos concentrations near the Rockville Crushed Stone quarry were 1,000 times greater than the average for 50 U.S. cities. Rock from the quarry is used along hundreds of roads and on playgrounds in the Washington area.

Later, the Environmental Protection Agency warned Montgomery County and the state that the stone represented a "potentially serious health problem" and officials began the costly process of removing it and sealing it throughout the area.

On Tuesday, the Montgomery County Council approved an $880,000 emergency appropriation to permanently seal 58 miles of unpaved roads surfaced with rock.

Declaring such rock bearing chrys tile asbestos a "threat to public health," the Maryland Department of Health and Mental Hygiene yesterday said that it would issue further regulations controlling other asbestosladen rock if and when similar health hazards are determined.

"Basically, we're trying to implement the department's policy of limiting exposure to known carcinogens," said George Ferrari, director of the department's division of air quality and noise control.

As proposed the state regulations would prohibit loose serpentinite rock on "any right-of-way, driveway parking lot, recreational area or similar area" whether public or private.

The standard would apply to private citizens as soon as regulations take effect but public agencies would have to correct already existing uses that are in violation of the new rules.

Ferrari said that crushed stone sealed in saphalt or buried in a road sewer or water excavation would be permissible. Loose stone used for erosion control or as ballast in railroad tracks also would be allowed since these applications do not result in abrasive release of the asbestos fibers, he explained.

In addition, the rules would require that vehicles transportating crushed stone be covered and that sign stating this regulation be posted at entrances and exits of plants quarrying the rock.

The proposal is designed to take effect by Oct. 1.

Ferrari's division has determined that Serpentinite one of two rocks known to contain asbestos, is mined in three sites in Maryland - at the Rockville Crushed Stone quarry in Montgomery County and the Blue Mont and Delight quarries in Baltimore County - and also at the Cedar Hill quarry over the Maryland line in Pennsylvania.

Under the standards plant operators would have to inform the health department of the quantities of crushed stone sold in the previous 12 months and to whom.

A spokesman for the Environmental Defense Fund, a private group that threatened to sue the EPA for inactivity in the local asbestos problems earlier this year, called the proposed standards good.