The Defense Department has been told to reconsider its decision to deny veteran's status to the men who sailed as merchant seamen during World War II.

U.S. District Court Judge Louis F. Oberdorfer, in an order dated Oct. 2, formally declared the Pentagon's previous decisions "arbitrary and capricious and . . . not supported by substantial evidence."

He ordered the decisions "remanded to the secretary of the Air Force for further consideration" and scheduled a hearing Wednesday, saying he expected the Air Force to provide him with a timetable for its deliberations.

The court order was directed to Air Force Secretary Edward C. Aldridge Jr. as the designated administrator of a 1977 law that governs such cases.

"We have worked for years to bring veterans benefits to these survivors and we are now closer to success in reaching this worthy goal," C.E. (Gene) DeFries, the president of District 1 of the Marine Engineers Beneficial Association (MEBA), said last week.

"Remember, these men are not arm-chair Rambos who have never seen the face of war. These men were tested at sea where they showed true courage," he said.

The MEBA is affiliated with the AFL-CIO, which assisted three former merchant seaman in bringing suit against the Pentagon in July 1986.

The designation sought by the merchant seaman would entitle them to obtain military service discharge certificates, which in turn would make them eligible for selected veteran's benefits such as home loans and burial in a national cemetery.

According to Navy historians, an estimated 250,000 men saw service in the merchant marine during World War II. It is not known how many are still alive.

Some of the men who are still alive, however, tried to use the 1977 law to win veteran's status. The law was passed after years of lobbying by female pilots who ferried aircraft during World War II.

Since the law was enacted, the female pilots and 13 other groups have won veteran's status, including civilians who participated in the defense of Bataan and a unit of female telephone operators who were pressed into service during World War I.

But in two other rulings in 1982 and 1985, the Air Force denied veteran's status to merchant seaman who worked on ocean-going vessels and seaman who participated directly in invasions. That set the stage for the court fight.

Oberdorfer, in a 34-page opinion handed down three months ago, ruled that the Air Force had not considered the merchant seamen's appeals in an "even-handed" manner and appeared to be ignoring compelling evidence of military service.