In a major legal victory for the Reagan Administration's policies, the Supreme Court yesterday ruled against terminating all federal funding to universities with sexually discriminatory practices.

The court decision calls for a narrow interpretation of Title IX of the Education Amendment Act of 1972. In effect, the decision permits the withdrawal of federal funds from specific programs that sexually discriminate but not from the universities themselves.

Sports

Under Title IX in the past, any university that discriminated on the grounds of sex in areas ranging from hiring and admissions practices to sports programs risked losing all federal funding. The law mandated, for example, similar treatment and funding for male and female athletics.

University officials expressed uncertainty about the ruling's effects on Harvard.

Vice President and General Counsel Daniel Steiner '54 declined to comment until he reads the court's opinion.

In Washington, feminist and civil liberties groups criticized the court's verdict as a step backwards for women's rights.

"It leaves women with no protection in their education," Bernice R. Sandler, executive director of the Project on the Status and Education of Women of the Association of American Colleges, said.

"An institution is free to discriminate except for areas using direct federal aid," she added.

"Some schools just won't have discriminatory practices scrutinized," Muriel M. Spence, legal counsel at the American Civil Liberties Union, said.

The Department of Education used threats of financial cutoffs as a last resort to deter discrimination, but no university has ever lost federal funds.

The government in the past has usually negotiated agreements with schools suspected of discrimination.

Opponents of the ruling hope to fight the decision in Congress, Sen Robert W. Packwood (R-Ore.) introduced a bill in the Senate yesterday alming to restore a broad interpretation of Title IX Rep Claudine Schneider (R-R.I.) plans to sponsor a similar bill in the House of Representatives.

"It is very likely that the Congress will move to change the court's decision," said John H. Shattuck, legislative director of ACLC, who will become Harvard's vice president for government and community affairs in June.

The court ruling came in the Grove City College's Bell case. The small fundamen talist college in Pennsylvanta refused to provide a statement to the Department of Education, saying that it did not distinguish between men and women when considering admissions applications.

The court ruled in favor of the government's claim that it would not provide financial aid for admissions at the school but also said the ban should not extend to other programs