The Department of Justice yesterday announced that it is intensifying its efforts to investigate and prosecute suspected Nazi war criminals living in the United States.

The announcement marked a significant victory for Rep. Elizabeth Holtzman (D-N.Y.), who, for the past five years, has been urging the government to beef up its war criminal investigations.

It was largely at Holtzman's insistence that the Carter administration in July 1977 established a special litigation unit in the U.S. Immigration and Naturalization Service to investigate suspected war criminals.

Holtzman, now chairwoman of the House subcommittee on immigration, refugees and international law, has accused the administration of underfunding the unit and otherwise giving low priority to finding persons "charged with horrendous crimes against humanity."

Associate Attorney General Michael J. Egan, who has responsibility for INS matters. acknowledged before Holtzman's subcommittee yesterday that the government has not done all it could to push Nazi war criminal investigations. He said the government is taking five major steps to improve its performance. They include:

Appropriating the full $2.052 million Congress authorized for the special litigation unit's operation in the current fiscal year (the Justice Department had given the unit only $900,000 of the authorized amount).

Requesting an additional $2.052 million for the Nazi war criminal unit for fiscal 1980.

Transferring the special litigation unit from INS to the Justice Department's Criminal Division.

Adding 15 new investigators to the special litigation unit, which has two investigators at the moment.

Hiring an administrative officer for the unit "to help alleviate bureaucratic problems."

Egan said the special litigation unit is being transferred out of INS in order to place it under the direct supervision of the Justice Department. The unit "has not worked out as we had hoped" it would at INS, he said.

Holtzman said she is "gratified that the (Justice) Department is committed to fully funding and staffing the special litigaion unit and to removing the bureaucratic obstacles that have hindered its effectiveness."