Michael Vernon Townley, the American-born agent for the Chilean secret policy who has admitted that he orchestrated the 1976 assassination of Orlando Letelier, yesterday coldly recited his story once again in U.S. District Court at the retrial of two anti-Castro Cubans whom Townley identified as the men he recruited to carry out the murder plot.

Townley, 38, polite and emotionless during five hours of questioning, told how he built a bomb -- which he once referred to as an "explosive artifact" -- in a Washington hotel room, and later attached it to the underside of Letelier's car, where it subsequently was detonated by remote control.

On the morning of Sept. 21, 1976, Letelier, once the Chilean ambassador of this country, and a colleague, Ronni Karpen Moffitt, were killed when Letelier's car was blown up as it rounded Sheridan Circle on Embassy Row. Eyewitnesses have testified that the force of the blast raised the car off the ground.

Townley told the jury of five men and seven women that he had received orders for what he repeatedly called "the mission" to assassinate Letelier from his superiors at the Chilean secret police, then known as DINA. Townley pleaded guilty to conspiracy to murder a foreign official (Letelier), and is serving a 3 1/2-to-10-year prison term.

"The bottom line was that Orlando Letelier was to be killed," Townley testified yesterday. Letelier had been an outspoken critic of the military regime of Augusto Pinochet, which had wrested the Chilean government from the control of Salvador Allende during a bloody coup in 1973.

Townley, dressed in a conservative blue suit, his hands folded in front of him, testified that he was told to travel from Chile to the United States and "farm out" the job to members of the Cuban Nationalist Movement in northern New Jersey.

Townley is now the star government witness against two members of that anti-Communist, anti-Castro group, Guillermo Novo Sampol and Alvin Ross Diaz. Both men are on trial for the second time in federal court on conspiracy and murder charges in connection with the deaths of Letelier and Moffitt.

Both men were convicted of the same charges in February 1979. But last September the U.S. Court of Appeals granted them a new trial after concluding that evidence from two fellow jail inmates of the two men was improperly used.

Townley testified he met with Guillermo Novo, Ross and other CNM members in his hotel room in Union City, N.J., and discussed the assassination proposal with them.

Townley said that the following day, Guillermo Novo told him "the decision of the (CNM) directorship was to go ahead, to take the mission on." They demanded, however, that someone from DINA play a role in the operation, Townley said, so he planted the bomb in Letelier's car.

Two other Cubans present at that meeting, Dionisio Suarez Esquivel and Virgilio Paz Romero, also were indicted in connection with the Letelier assassination but they are both fugitives. Three Chileans, including Juan Manuel Contreras, once the head of DINA; its director of operations, Pedro Espinoza Bravo, and DINA operative Armando Fernandez Larios, also were charged in the killing but the Chilean government has refused to extradite them.

Before he left for Washington, Townley testified, Guillermo Novo gave him a bag of explosives. Paz gave him a remote-control detonation system and a blasting cap was later supplied by Suarez. Townley said Paz drove with him to Washington, where they eventually were joined by Suarez.