The Justice Department said yesterday that it has ended an investigation of Rep. Charles Schumer (D-N.Y.) and will not prosecute him over allegations that he misused funds for his 1980 congressional campaign.

"The department has determined that the matter is not appropriate for federal prosecution and has closed the investigation," officials said in a statement.

In 1980 Schumer was a member of the New York State Assembly and served as chairman of its Committee on Oversight and Investigation.

Published reports said Schumer, 32, had been under investigation for more than a year because of allegations that he had used staff on the payroll of the committee to work in his congressional campaign. The investigation was conducted by the U.S. attorney's office in the Eastern District of New York.

Associated Press quoted officials as saying that the evidence would be offered to Manhattan District Attorney Robert Morganthau if he expressed an interest. Morganthau could not be reached for comment.

Schumer's congressional office had no immediate comment on the Justice Department's announcement.

It was disclosed two weeks ago that officials in New York had forwarded a recommendation to the department that it seek an indictment of Schumer.

That is the procedure used in handling sensitive political matters before asking a grand jury to vote on an indictment.