The Agriculture Department, giving in to grain industry concerns, backed off yesterday from its plan to prohibit live insects in U.S. grain by 1992.

The department announced tighter standards on insect infestation effective May 1, 1988, but refrained from making them as strict as it originally planned. The grain industry argued they would have been impractical.

Officials also announced regulations that will prohibit adding foreign material and dust to grain.

The new rules are part of an effort to enhance quality following an increase in foreign complaints about dirty U.S. grain.

In March, the department proposed to tighten gradually the allowable limits on insect infestations in grain shipments. By 1992, grain with any live insects would have been considered infested.

The final regulations announced Tuesday will rate wheat, rye or triticale as infested if it has two or more live weevils, one live weevil and one other live insect that can hurt stored grain or two live insects injurious to grain.

The new standard for barley, corn, oats, sorghum, soybeans, sunflower seed or mixed grain is less stringent than the food grain rule.

W. Kirk Miller, administrator of the department's Federal Grain Inspection Service said, "The revised insect tolerances reflect the needs of the domestic flour milling industry and still recognize the distinction between food and feed grains."

Randy Gordon, a spokesman for the National Grain and Feed Association, said, "Our reaction is fairly positive." He said the new rules are "tighter" but "achievable."

The grain industry told the department that a zero tolerance standard was "simply impractical," given growing conditions and Environmental Protection Agency restrictions on fumigants.