The government yesterday invoked, for the first time, an emergency power Congress gave it 15 years ago in order to rule a popular prescription drug called phenformin an "imminent hazard to the public health" and thereby halt sales.

Secretary of Health, Education, and Welfare Joseph A. Califano Jr. said that under normal administrative processes, sales of the drug would continue for a year. During that period, hundreds of the 336,000 users - adults with mild diabetes - would die needlessly, he calculated.

He established "a 90-day transitional phaseout period to ensure" that patients on the durg "can be transferred in a safe, orderly and consistent manner to other therapies."

Phenformin is sold by CIBA-Geigy Corp. as DBI and DBI-TD and by USV Pharmacuetical Corp. as Meltro-25 and Meltrol-50.

Physician have prescribed it since 1959 to lower blood sugar in adults with so-called onset diabetes. Last year, when there were 385-000 users (49,000 more than at present) retail sales were about $25 million.

Califano said in a 66-page statement that he ruled phenformin an imminent hazard because the death rate among users "is far higher than has been regarded as acceptable for any other drug approved for use in the United States for a broad patient population."

Moreover, he wrote, about half of those who use phenformin may avoid the dread complications oif diabetes, including blindness and heart and kidney disease, by relying upon dietary restrictions and other drugs. For the other half, he said, insulin shots are "an effective alternative."

In addition, Califano said, studies have shown that the effectiveness of phenformin in lowering blood sugar can disappear in as few as two years.

Califano's action drew praise from Dr. Sidney M. Wolfe, who petitioned for it on April 22 on behalf of the Health Research Group which is financed by Ralph Nader's Public Citizens, Inc. CIBA-Geigy said however, that the action could present a medical hazard to thousands who cannot use other drugs. The company said it has not decided what action it may take.

Like other pills that lower blood sugar, phenformin in long-term use has been found in a government-financed study to increase the risk of fatal cardiovascular complications by up to 2 1/2 times. But phenformin alone has been found to cause lactic acidosis, a metablic disorder in which lactic acid accumulate in the blood in abnormal amounts. It is fatal in one of two victims.

By June 1, the Food and Drug Administration knew of 245 phenformin related cases of lactic acidosis. But Califano, emphasizing that the voluntary system of reporting adverse drug reactions on which the FDA depends results in "substantial underreporting." said. "The true incidence is most certainly higher."

Two years ago, Dr. J. Richard Crout, head of the FDA's Bureau of Drugs, told a Senate hearing that he saw no rationale for the continued sale of phenformin, but had to, and would, refer the issue to an advisory committee.

Because of an unexplained delay, the referral wasn't made for more than a year. Last October, when the number of phenformin-induced lactic acidosis victims known ot the FDA was 190, with most of the cases having occurred since 1974, the advisory panel unanimously recommended removal of the drug from the market.

In January, as an interim step, the bureau tightened the official prescribing instructions by, for example, urging smaller doses. But Califano said yesterday that labeling changes "cannot be expected to achieve a needed reduction in the usage of phenformin within any reasonable time frame.I cannot rely on these measures with so many lives at stake."

In May, after further study, the bureau formally determined that phenformin's risks outweighted its benefits and launched a standard administrative proceeding to withdraw approval to market it - with sales meanwhile continuing. Also in May, Crout consearch Group petition for the imminent-hazard action, which only the HEW Secretary is empowered to take.

The bureau calculated that phenformin-induced fatal lactic acidosis occurs at an annual rate of 0.125 to 2.0 per 1,000 users - five to 80 times higher than for other drugs than can cause fatal reactions.

Saying that a small number of persons may need phenformin, Califano directed the FDA to devise a plan to make it available to them. If the FDA succeeds, Califano said, he could modify his action.

Canada and Norway have banned phenformin.