The Immigration and Naturalization Service said yesterday that it will not attempt to expel Margaret Randall, an American-born leftist writer who, INS officials said, renounced her citizenship 20 years ago, and became a Mexican citizen.

The service issued the statement as Randall's attorney, David Cole, urged the U.S. Circuit Court of Appeals to overturn an INS district director's 1985 refusal to give Randall permanent residency status on the ground that her writings espoused communism.

Cole argued that the decision was unconstitutional and that Randall's period of permanent residency should be declared to have begun in October 1985. This would allow her to apply for citizenship in October 1988 if she is granted permanent residency status, Cole said.

"If this court dismisses the case, it will be sanctioning the district director's decision," Cole said. Randall would then "have to wait an extra 2 1/2 years before she can vote and exercise the other rights of citizenship."

In the 1985 ruling, the INS district director had decided that Randall, a professor at Trinity College in Hartford, Conn., was ineligible for permanent residence because she advocated world communism in her writings. An administrative law judge upheld the ruling last October and Randall appealed to the Board of Immigration Appeals.

Assistant U.S. Attorney Michael Martinez told the appeals court it was likely that the Board of Immigration Appeals would give Randall permanent residency status. Martinez argued that an appeals court ruling on the 1985 decision was not needed because the board could grant Randall permanent residency retroactive to October 1985.

A section in the Foreign Relations Authorization Act, recently passed by Congress, prohibits the government in 1988 from excluding or deporting people for their beliefs, statements they have made or who they associate with.

The INS statement said: "Congress has now seen fit to suspend various provisions of the immigration laws for a year and, since a final administrative decision has not been reached by the board, we are not going to oppose the application of the new law in the Margaret Randall case."