Mayor Marion Barry plans to urge the City Council to overturn an arbitration panel's unprecedented ruling in favor of D.C. police officers' contract demands, according to an aide, and he met yesterday with leaders of public employe unions to defend his position.

The mayor's decision probably will be announced next week, said the aide, who asked not to be named. It will touch off a major political battle within the council, according to some council members, and further strain Barry's relations with organized labor.

"If he opposes this, he may well be commiting the grossest unfair labor practice in this city's history," said Gary Hankins, chairman of the labor committee of the Fraternal Order of Police (FOP), which negotiated the contract.

City Council member John A. Wilson (D-Ward 2) said council members will be faced with a "tough choice" between Barry's calls for budget restraint and pressure from police officers who patrol their wards.

Wilson, chairman of the Finance and Revenue Committee, said Barry may have trouble arguing that the District can't afford the police contract, in light of his recent midyear financial report showing that revenues will exceed original projections by about $41 million in the current fiscal year.

A three-member arbitration panel ruled a week ago that the District must grant its police union larger pay raises than those already accepted by the union representing D.C. firefighters -- a decision that could cost the city $23 million more in pay and benefits than it is willing to pay.

The 65-page rule in favor of the FOP was the first salary dispute decided by binding arbitration under D.C. labor law, and it discards the longstanding principle that Washington's police officers and firefighters should receive the same salaries. The ruling is subject to a 60-day review period by the City Council, which can overturn the decision with a two-thirds vote.

Council Chairman David Clarke said recently that he would vote to uphold the arbitration panel's ruling, and several other council members have voiced sympathy for the FOP. However, Hankins said he expected a tough battle, with the mayor "twisting arms" to try to overturn the ruling.

Six public employe unions that took part in yesterday's meeting with Barry, including the American Federation of Government Employees (AFGE), the American Federation of State, County and Municipal Employees (AFSCME) and Local 36 of the Firefighters union, issued a joint statement after the meeting in support of the arbitration panel's ruling.

"In our meeting with the mayor, we have told him we are in complete and full support of the FOP arbitration award and are in complete support with the concept of binding arbitration," Bernard Demczuk, an AFGE official, said on behalf of the unions.

Hankins, who was not at the meeting, said it was ironic that Barry helped draft the current labor law while he was a member of the City Council, then signed it into law as mayor and now is preparing to oppose a provision of the law stating that the mayor shall support arbitration awards "by every reasonable means."

Gwen Hemphill, the mayor's special assistant for labor relations, said that Barry called the meeting to outline some of his concerns and to put to rest rumors about his intentions.

The AFGE filed an unfair labor practice complaint with the D.C. Public Employee Relations Board May 22, accusing Barry of understating the city's 1985 revenues and seeking to reopen negotiations on salaries for nearly 8,000 city workers.

Joslyn N. Williams, president of the AFL-CIO's Metropolitan Washington Council, predicted at the time that other public employe unions would follow suit in attempting to reopen contract talks, in light of the arbitration panel's ruling and a growing controversy over the city's revenue projections.

Betsy Reveal, the mayor's budget director who was among a handful of high-level city officials who attended yesterday's meeting in Barry's office, said afterward that AFGE and other unions were provided with the best revenue estimates available at the time of contract talks. She added that there are no guarantees that the revenue picture will continue to improve, and that it would be unwise for the District to agree to a major increase in labor costs.