Labor Department chief of staff Daniel K. Benjamin resigned yesterday following a Justice Department decision not to pursue allegations that led to an internal investigation of Benjamin.

Labor spokesman Michael Volpe said the U.S. attorney here had "declined consideration of prosecution due to the absence of any apparent violation of law." James B. Hyland, the department's inspector general, also has closed his probe of the alleged improprieties, Volpe said.

Benjamin, on paid leave from his $66,400 job since mid-October, disclosed his resignation in a letter to Undersecretary Ford B. Ford. Ford, who is temporarily running the department while Secretary Raymond J. Donovan is on leave to fight a criminal indictment, will be assisted by an acting chief of staff, Linda Townsend.

Benjamin told Ford he had been planning to return to private economic research.

"I delayed my resignation until now, pending the outcome of the inspector general's investigation into baseless charges against me," he said. "Now that I have been totally cleared, I am submitting my resignation."

The internal probe involved Benjamin's use of a 32-foot boat owned by James McKevitt, a lobbyist for the National Federation of Independent Business, which represents more than 500,000 small companies affected by Labor regulations. Benjamin borrowed the sloop for a weekend cruise in July.

Benjamin has said he and McKevitt rarely discussed business on earlier sailing trips and that there was no conflict of interest because they were simply friends. Volpe said that Benjamin borrowed the boat in return for doing repairs on it.

Investigators also questioned Benjamin's role in a $2,357 contract awarded without bidding to Keith Wollenberg, Benjamin's research assistant when Benjamin taught at the University of Washington. Wollenberg's seven-day assignment immediately followed the sailing weekend, on which he accompanied Benjamin. Another former student of Benjamin's, who at the time worked at the Labor Department, also made the trip.

Volpe has said that Wollenberg was well qualified for the contract to analyze public comments on a hazardous substance.

Benjamin's resignation came as Rep. David R. Obey (D-Wis.) wrote Ford for the second time in two weeks, demanding to know Benjamin's status and the nature of his extended leave.

"I have not only a right but a responsibility to know whether or not people at the department are showing up for work and if not, why not," wrote Obey, a member of the House Appropriations labor subcommittee. "This is particularly true if they are paid over $60,000 a year."

Volpe said that the department had provided most of the information but was precluded by law from disclosing certain details of Benjamin's leave.