Secretary of Health, Education and Welfare Joseph A. Califano Jr. yesterday refused to ban the sale of the popular prescription painkiller Darvon but ordered steps to warn of its hazards and determine whether stronger action is necessary.

Califano said the drug, known as propoxyphene, is generally safe when used as directed. But he said he would order a review of it because it is associated with "more deaths than... any other prescription drug."

The steps include a special HEW warning letter to one million doctors and health professionals, recommending that patients be told of the drug's potential risk. Califano also called for a day of public hearings and studies to determine by June 1 whether the drug should be made more difficult to prescribe and refill.

Dr. Sidney Wolfe, director of the Health Research Group, which petitioned Califano to ban Darvon as an imminent health hazard last November, told reporters yesterday after Califano's announcement, "Because Mr. Califano is not taking more serious action, it is likely thousands of more people will die" through over-doses or accidental use of the drug in connection with alcoholic beverages or tranquilizers.

Wolfe said other drugs such as aspirin, Tylenol and Datril serve the same painkilling functions without being addictive or nearly as dangerous. "Darvon is addictive at doses as little as twice the daily dose," Wolfe asserted.

Califano, in announcing he would not ban Darvon at this time, said the drug is known to be dangerous when "used along with alcohol or tranquilizers" or deliberately used for suicide. With 31 million outpatient prescriptions it is the third most widely prescribed brand-name drug.

Califano said propoxyphene "is now second to barbiturates as the prescription drug most often associated with suicides."

In 1977, according to Califano's statement, "there were 607 propoxy-phene-related deaths" in the one-third of the country covered by the Drug Enforcement Administration's Drug Abuse Warning Network.

However, Califano said that since it is safe when used as directed, he wouldn't take the "extraordinary step of declaring propoxyphene an imminent hazard" and banning it until more is known about the drug, both its benefits and dangers, and until more is known on how many of the 607 deaths were actually caused by the drug.

"Mentions of propoxyphene as related to death can merely mean that the deceased person had the drug in his or her blood, not necessarily that it was in fact the cause of death," he said.

Even if Darvon is never banned, Califano could recommend that the Justice Department make it more difficult to obtain, by classifying it as a Schedule II controlled substance instead of Schedule IV -- a proposal Wolfe has also made if the drug is not totally banned.

A Schedule IV substance can be prescribed by telephone, can be produced by the manufacturer in unlimited quantities and a prescription can be refilled five times every six months. Under Schedule II, limits would be placed on manufacture, druggists couldn't dispense it without a written prescription and refills would be banned.

Eli Lilly & Co. of Indianapolis is the principal manufacturer of Darvon. Prescriptions sold last year totalled $140 million.