The Department of Housing and Urban Development has not required public housing projects to report the race of their tenants since 1977, HUD general counsel John J. Knapp told a House subcommittee yesterday. Without this information, the department has been unable to track racial occupancy patterns reliably, he said.

Last spring, the department confirmed separately, the Office of Management and Budget rejected a form that HUD proposed to use to collect the information.

In the meantime, public housing authorities in more than 40 Texas counties were operating almost entirely segregated housing. Reports of the east Texas discrimination and segregated public housing in other parts of the nation, published earlier this year by The Dallas Morning News, led to the hearing yesterday before the housing subcommittee of the Banking, Finance and Urban Affairs Committee.

HUD now is "planning to revert to project-level data collection in subsidized programs," Knapp said. The department stopped requiring reports from housing projects "because a decision was made instead to rely on getting that data from individual tenant" forms, he said. But the forms had a "high error rate" and HUD's automated data system did not process them reliably, Knapp said.

HUD has revised its form but has not yet submitted it to the OMB, Knapp said. But the department expects no trouble in getting approval because the budget office has approved collection of similar racial information on HUD and Veterans Administration loan guarantee applications, he said.

Last spring the OMB told both HUD and the VA to stop using the racial data section of their loan applications but later backed away from those instructions, HUD and VA spokesmen said at the time. OMB has authority under the Paperwork Reduction Act to review proposed federal regulations.

HUD's failure to collect racial information appeared to "reflect an absence of concern" about discrimination in public housing, said Rep. Henry B. Gonzalez (D-Tex.), the subcommittee chairman.

The department's failure to use its power to withhold or place conditions on Community Development Block Grant funds because of discrimination also drew fire from the panel. HUD has denied funds four times in the last five years, and put conditions on how the money could be used five times during the same period, according to a HUD report to the subcommittee.

HUD is reluctant to withhold funds because residents who would benefit from projects funded by the community development funds would suffer rather than the local officials responsible for discriminatory practices, Knapp said.