The government today announced a complete restructuring of security at Buckingham Palace and revealed that Queen Elizabeth's encounter with an intruder in her bedroom July 9 was more menacing than previously thought.

Michael Fagan, the man who broke into the palace and accosted the queen, "said he intended to slash his wrists in the presence of Her Majesty," according to a report released in Parliament by Home Secretary William Whitelaw. For that purpose, he "broke an ordinary glass ashtray" into several pieces, the report said.

After police failed to respond to the queen's night alarm bell and two telephone calls for help, the report said, the queen and a maid "ushered Fagan into a nearby pantry on the pretext of supplying him with a cigarette." When the queen's footman returned from walking her dogs to find Fagan, "Her Majesty kept the dogs away as the man was getting agitated." It apparently took two servants and two policemen to finally remove Fagan from the room.

To prevent the recurrence of such an incident, Whitelaw declared, a newly created police division will be responsible for "all aspects of royalty protection." The new command structure, combined with technical improvements to existing security equipment, should "ensure efficiency, greater professionalism and effective supervision," Whitelaw said.

In the case of Michael Trestrail, the queen's personal bodyguard who resigned last weekend after admitting to a long-term liaison with a male prostitute, Whitelaw announced that Lord Bridges, chairman of the government's Security Commission, would investigate how Trestrail, a potential blackmail victim, passed an intensive examination of his personal life.

Whitelaw's report was scathing in its criticism of the police officers on duty when Fagan broke into the palace, calling their responses "appalling" and "completely inadequate."

The commander of the police detail responsible for security inside the palace, Victor Lashbrook, has resigned from the force, Whitelaw said. His superior has been transferred to duties not connected with the palace. The police sergeant in charge at the time of the incident has been suspended and at least one other officer is under investigation.

Nothing said by Whitelaw today indicated that either he or the commissioner of Scotland Yard, Sir David McNee, expects to lose his job over the incidents.

Protection of the royal family will be under the supervision of a deputy assistant commissioner at Scotland Yard, Colin Smith, 41, who will work from Buckingham Palace.

Whitelaw said that henceforth a policeman would be on duty outside the queen's private apartment at all times. He said that access to the quarters would be further restricted by adding various alarm systems, making the outside drainpipes inaccessible and reinforcing a nearly $4 million security modernization that was begun in response to Irish Republican Army terrorism in 1979.