It was reported incorrectly yesterday that chemical companies voluntarily agreed in 1978 to limit the amount of dioxin in herbicides to 1 part per million. The agreement was one-tenth part per million.

The Environmental Protection Agency, which on Tuesday decided to buy out the entire dioxin-contaminated town of Times Beach, Mo., still allows sale of herbicides with far higher levels of dioxin than were found in the tiny Missouri town, and has fought congressional efforts to restrict the chemical's use.

A review of EPA policies and documents shows that the agency is allowing companies to sell products with concentrations of dioxin more than three times greater than levels found in Times Beach.

Although dioxin in its original form would be far more concentrated than residues found in the ground years later, discovery of the chemical in samples of soil in Times Beach has sharpened public concern about uses of dioxin.

Even as the EPA announced that it would buy out all 2,400 residents of Times Beach, agency lawyers were negotiating an out-of-court settlement that could lift restrictions on Dow Chemical Co.'s production of 2,4,5-T, a herbicide containing dioxin.

EPA officials also acknowledged yesterday that they have not tested dioxin-containing herbicides now on the market to determine whether they comply with a 1978 agreement to limit the dioxin level to one part per million--about three times higher than levels found at Times Beach.

The agency contends that tougher warning labels for 2,4,5-T would be sufficient to protect the public.

Rep. James J. Florio (D-N.J.) reacted yesterday to the Times Beach buy-out by charging that the EPA has created "loopholes" in the law that allow unrestricted use of dioxin and of millions of tons of pesticide residues, as well as mixtures of toxic wastes with fuel oil and sewage and other hazardous compounds.

"The administration is actively opposing an effort to prevent new Times Beaches from being created," Florio said.

"Tomorrow, if someone had 46 pounds of dioxin and wanted to blend it with waste oil and put it on the roads as happened in Times Beach , they would be in a position to do that," Florio said. "The fact of the matter is, that does not violate the law ."

He said it made no sense to move people out of one dioxin-contaminated site "if we don't do something about changing the conditions out of which that site arose."

Florio said that the House passed amendments last year to close so-called loopholes in the Resource Conservation and Recovery Act but that the EPA helped to defeat them in the Senate. Rita M. Lavelle, the EPA's former hazardous waste chief, said in a letter last year that the proposed changes would be "sudden, costly and potentially damaging."

After Florio spoke yesterday, EPA officials strongly denied that they have created loopholes in the act, the principal law regulating disposal of toxic wastes. They said that dioxin, for example, is regulated under another law and that they must be given 60 days' notice to review any plan to dispose of dioxin-contaminated waste.

But Florio charged that the EPA has failed to take action under any law to restrict production of dioxin or make federal money available to clean it up.

Lavelle said last year that a plan of Florio's would impose "a host of inflexible deadlines" on the EPA and would be "inefficient and unnecessary." She said Florio's proposal to regulate small firms that generate less than a ton of toxic waste each month would encourage them to get rid of the waste illegally.

Dioxin is the generic name for 75 compounds formed as unwanted byproducts during manufacture of certain herbicides and germicides.

The controversy over dioxin erupted in the 1970s after complaints that widespread spraying of Agent Orange as a defoliant in Vietnam caused health problems. Similiar complaints were raised about 2,4,5-T, an Agent Orange ingredient used as a weedkiller in the United States for more than 30 years.

In 1979, the Carter administration restricted use of 2,4,5-T, which contains one of the most potent forms of dioxin, after a controversial EPA study linked it to several miscarriages among Oregon women.

But shortly after taking office, EPA Administrator Anne M. Burford moved to drop those restrictions by ordering her attorneys to reach an out-of-court settlement in a suit brought by Dow Chemical.

Dow has sued the EPA to overturn the Carter restrictions, which limited the weedkiller's use to rangeland and rice. The company claims that the EPA's data is flawed and that, while tiny amounts of dioxin have caused birth defects and cancer in animals, there is no evidence that it is harmful to humans.

Although the company has stopped producing the herbicide, it has continued to sell 2,4,5-T from its stockpile, with the EPA's approval.

An estimated 165 million Americans may have been exposed to dioxin from various herbicides. Chemical companies are able to limit the dioxin in their products to safe levels, but such refinement is expensive.