The UCLA scientist who tried the first genetic engineering experiment on human beings will be punished by the federal government for violating rules.

The National Institutes of Health will inflict the most severe penalty it has ever meted out to a researcher for violation on two sets of rules in gene experiments he carried out on two young women in Italy and Israel, according to an NIH report released today.

The report said that the work of Martin J. Cline of the University of California at Los Angeles violated federal rules against unscrupulous research with humans and the federal ban on some research with artificially mixed genes, or recombinant DNA.

The NIH will review all four grants Cline has from it, totaling about $600,000, to decide whether they should be terminated.

Any further human research by him will have to have special NIH approval, as will any further recombinant DNA research he wants to do.

Cline's experiments were called "totally irresponsible," "wrong," and "one of the most flagrant abuses in our memory" by his colleagues when the work was revealed last fall. Cline responded that he was trying to advance the treatment of a widespread, painful, and fatal disease, and that no harm has been done to the patients.

The experiments were an attempt in July, 1980, to cure a fatal blood disease called beta thalassemia in a 21-year-old woman in Israel and a 16-year-old girl in Italy. Beta thalassemia is a disease that prevents bone marrow from making normal red blood cells because one gene that triggers the manufacture of the blood cells is defective.

Cline injected healthy, artifically altered bone marrow cells into the young women in the hope that the cells would multiply, crowd out defective cells, and make normal blood. According to the most recent report, the process has not yet produced healthy blood cells and the women continue to survive only with repeated blood transfusions.

"My examination of the report leads me inexorably to agreement with the conclusion that Dr. Cline has violated both the letter and the spirit of proper safeguards to biomedical research," said Donald S. Fredrickson, director of NIH.

Cline could not be reached for comment. This punishment is the second he has received for the experiments; the first came after UCLA investigated and asked him to resign as head of the hematology and oncology department at the UCLA Medical School and to step down from leadership of other hospital groups as well.

The conclusion of the NIH group is that Cline used genetic material in those experiments that was prepared with NIH funcing and, therefore, he had to get approval of the NIH for the experiments if they involved gene splicing. He did not ask for permission from UCLA, Israel, or Italy to use the products of gene splicing (recombinant DNA) in his work on humans. In fact, he told the Israelis that he would not use recombinant molecules.

In the report, Cline is quoted as saying, "I deeply regret my decision to proceed with the use of recombinant molecules without first obtaining permission . . . I exercised poor judgment in failing to halt the study and seek appropriate approval."

Cline used gene splicing in the experiments to inject the healthy genes missing from the bone marrow of the young women into samples of their bone marrow cells. These altered cells were then reinjected into the patients in hopes that they would grow and make normal amounts of blood.

No final results of the experiment are known, but the chief object of the experiments was to get the marrow cells into the patient and growing.

The UCLA committee which refused Cline's application disagreed. It said that more animal work is necessary before such an experiment should be tried in humans.