The Department of Education notified the Rev. Jesse Jackson yesterday that it will not renew the federal grant for his PUSH-EXCEL school project, which attempts to motivate minority youth to study and achieve in school.

Assistant Secretary of Education Vincent Reed, former superintendent of the District of Columbia school system, advised Jackson in a letter hand-delivered to Jackson's office here that the grant, for $825,000, was being canceled because PUSH-EXCEL "has refused to permit access to its books by our auditors."

The department insisted on an audit after the Commerce Department, on behalf of several departments having dealings with PUSH (People United to Save Humanity), inspected the group's accounting system and concluded that it was "not adequate to safeguard assets" and reflect grant costs, Reed said in his letter.

Reed said PUSH general counsel John Bustamante had written the Department of Education on July 13 indicating that PUSH might decline the grant and saying that perhaps the money should be given directly to the school systems across the country that have been working with the Jackson project, in part with funds provided in earlier federal grants channeled through PUSH-EXCEL.

Reed said he read that letter, and one sent to him Wednesday that he said accused the department of foot-dragging, "as a refusal of the proposed grant from this department." The letters, together with the audit problem, left no alternative "but to decline to make the grant to PUSH."

Although the Jackson project received three highly unfavorable reports by Department of Education evaluators in the past 15 months, Secretary of Education Terrel H. Bell said June 17 that he intended to renew it because Congress, as it had done the previous two years, had allocated money for the grant. At that time Bell said, however, that "this will be the last year."

Reed's letter, however, said that the congressional action did not require the grant to be made in the face of the audit problem.

Neither Jackson nor any of his aides could be reached for comment.