The late CIA director William J. Casey "misrepresented or selectively used available intelligence" to win support for the Nicaraguan contras and other programs that he favored, according to the majority report of the congressional Iran-contra committees released yesterday.

The manipulation of intelligence assessments, the report said, "subverted" the democratic process and deprived top government officials of facts they needed to make crucial policy decisions.

The report, citing new examples from several 1986 intelligence documents, said that Casey pressured his intelligence officers into changing some reports on the contras; that he overstated the contras' supply problems at one high-level meeting; that he exaggerated the importance of a Nicaraguan government raid against a contra base in Honduras; that he wrote a letter to President Reagan that distorted the attitudes of Central American leaders toward the U.S. contra policy.

Casey died in May and never testified before the House and Senate committees that conducted a 10-month investigation of the Iran-contra affair. Citing Casey's inability to testify as one of the major reasons the investigation failed to resolve important questions, the majority report nonetheless concluded that Casey was a central figure in the secret Iran arms sales and the covert effort to provide financing to the contras.

The report described how Casey aided Lt. Col. Oliver L. North, then a National Security Council aide who was intimately involved in both initiatives. Casey "encouraged North, give him direction and promoted the concept of an extra-legal covert organization" that would operate outside normal CIA channels.

The report also concluded that there are "strong reasons to believe that Casey was involved with" the diversion of the Iran arms sale profits to the contras, although it conceded that the evidence was based on the testimony of only two witnesses -- North and North's deputy at the NSC, Marine Lt. Col. Robert L. Earl, who testified that North once told him that Casey knew of the diversion.

Eight Republican members of the Iran-contra panel, in a minority report, also said "we are inclined to believe" that Casey knew of the diversion.

However, the minority report took sharp exception to the majority report's assertion that Casey had misused intelligence data, saying it had seen "no evidence" of intelligence bias at the CIA.

The issue of whether Casey had "cooked" intelligence reports surfaced most vividly during the testimony of Secretary of State George P. Shultz, who was often at odds with Casey during Casey's tenure. Shultz testified this summer that he had come to have "great doubts about the objectivity and reliability of some of the intelligence I was getting."

Former CIA deputy director John N. McMahon, in private testimony before the panel, sharply disputed this assertion, saying, "This is so damn false, and I think George Shultz got away with murder on that one."

But yesterday's majority report sided with Shultz. It said, "The democratic processes also are subverted when intelligence is manipulated to affect decisions by elected officials and the public. This danger is magnified when a director of central intelligence, like Casey, becomes a single-minded advocate of policy."

Sen. David L. Boren (D-Okla.), the chairman of the Senate intelligence committee and a member of the Iran-contra panel, said he was concerned about the possible misuse of CIA data and planned to hold hearings to insure that intelligence is no longer being "cooked."

Yesterday's majority report gave the following specific examples of how intelligence data was manipulated:In January 1986, a comprehensive CIA report said that the contras "have adequate weapons and ammunition and . . . problems with food supplies appear to have eased . . . . " But at a briefing that preceded an NSC meeting on Jan. 9, 1986, Casey chose to ignore this and said, according to notes taken at the meeting, that he wanted "to make the insurgency choice stark -- either go all out to support them, or they'll go down the drain." In the spring of 1986, Casey became enmeshed in an effort to swing the congressional debate over an aid package for the contras by heightening concern about the Sandinista government of Nicaragua.

The report said the Reagan administration was misrepresenting intelligence data about the Sandinista forces, who were conducting raids against contras in Honduras. Such raids had been routine for nearly a year, the report said, and neither Honduras nor the United States had emphasized them because they were limited operations aimed at the contras who were based in Honduras.

Nonetheless, the majority report said, "The White House response ignored this assessment, blamed Congress for encouraging the raid, and used the incident to authorize emergency military aid to Honduras." The House of Representatives had about this time rejected a $100 million contra aid package, and the president provided $20 million in emergency military assistance to Honduras.

In a March 25, 1986, briefing for the White House press, spokesman Larry Speakes connected the House rejection with the incursion.

Casey, in an April 3 memo to his deputy director for intelligence, said he wanted to use the material on the incursion "to alert the world that the Sandinistas were preparing and trying to knock the contras out while we debated in the U.S. and can have another bigger try if we debate another two weeks."

Casey received a reply from a deputy that the Pentagon's Defense Intelligence Agency "wanted to prepare a dissent" and that the State Department intelligence branch had estimated lower numbers of troops.

In a reply that same day, Casey complained to another CIA official that the report still failed to make the point that the incursion "appears to us to be a long-planned effort designed to knock out the contra forces quickly . . . . " In his final overseas trip as director last year, Casey visited Central America. According to the report, one leader refused to see him, another criticized U.S. policies and a U.S. ambassador warned him that most Latin American countries opposed the contra policy. But in a Nov. 23, 1986, letter to Reagan, Casey said, "The leaders {of Central American countries} were scared to death that we would not stay the course . . . " by continuing support to the contras.