FBI Chief Is Given an Ultimatum--Quit or Be Fired : Government: Sessions meets with Reno, others. His departure could come as early as Monday. Clinton has reportedly offered the post to District Judge Louis Freeh.

President Clinton sought the resignation of embattled FBI Director William S. Sessions on Saturday and was prepared to fire him, perhaps as early as Monday, if he refused to comply, sources said.

In his place, the President was poised to name U.S. District Judge Louis J. Freeh of New York, a 43-year-old former FBI agent. High-ranking White House officials said Freeh was offered the job after a 90-minute meeting with Clinton in the White House residential quarters Friday night.

Only the timing of Sessions’ departure and Freeh’s appointment appeared in doubt Saturday.

“It’s clear to everyone here (in the White House) that Director Sessions can no longer be effective in the job,” an official said.

Sources said, however, that the President was still hoping for a graceful way out of what has become an uncomfortable predicament for the Administration.

Sessions, a Ronald Reagan Administration appointee who has been chastised by an internal investigation, has so far refused to comply with repeated suggestions that he step down. He reiterated that refusal early Saturday morning before showing up half an hour late for a meeting with high-ranking Justice Department officials, including Atty. Gen. Janet Reno, to discuss his future.

Sessions, who had been in Chicago for an appearance on Friday, was ordered back to Washington to attend the 8 a.m. gathering.

Sources said Reno told Sessions that he must resign or he would be fired and made it clear that the Administration intended to follow through on the request within days.

Although one source said he expected Sessions would acquiesce sometime before Monday morning, FBI spokesman John Collingwood said Sessions “expects to return to a normal schedule on Monday.”

Neither side would comment on Saturday’s meeting. A clearly agitated Sessions left the Justice Department hurriedly, rushing down the street as television cameras recorded his departure. Apparently distracted by the presence of the camera operators, he stumbled over a curb and fell headlong onto a sidewalk.

Although he was able to get up and continue on unaided, he later went to a hospital emergency room complaining of pain in his elbow and was diagnosed with a broken arm. Hospital officials said they planned to hold him overnight for observation.

Freeh is reported to be highly regarded in federal law enforcement circles. He became one of the nation’s youngest federal judges when former President George Bush appointed him to the bench in Manhattan in 1991.

Clinton was described as enthusiastic about Freeh’s “outstanding credentials” for the FBI job, as both a former agent and federal prosecutor who prosecuted Mafia leaders in New York and helped develop corruption evidence in the 1980s against top officials of the International Longshoremen’s Union.

One source said the President felt Freeh’s appointment would help lift spirits in the FBI, where morale has plummeted because of Sessions’ refusal to step down.

Clinton declined substantive comment on the matter as he met with Midwestern governors and inspected flood damage. “I have nothing to add to what’s been said or speculated about,” he told reporters, adding he was “very sorry” to learn about Sessions’ broken arm.

He referred further questions to Reno, but she sidestepped them with a flat “no comment” as did Justice Department spokesmen.

The replacement of Sessions, 63, had been viewed as inevitable ever since a Justice Department report, issued seven months ago by then-Atty. Gen. William P. Barr, found that he had violated a series of FBI ethics regulations--among them, using the bureau’s planes and a limousine for personal travel.

Since Reno’s appointment, Sessions has met repeatedly with her or her top assistants in an effort to defend his conduct and keep his job--or, failing that, to dictate the terms of his departure.

At one point, he said he wanted to remain in place until the end of 1993 to ensure a larger government pension, officials said. He also was said to be trying to keep his job until a new director was appointed so he could prevent his archrival, Deputy Director Floyd Clarke, from serving as director in the interim.

Reno, mindful of a pledge she made at her confirmation hearings in March that one of her highest priorities would be the Sessions issue, wanted a showdown to occur before Clinton left earlier this month for the economic summit in Tokyo.

But White House officials were said to have avoided the confrontation on grounds they did not want a domestic controversy to detract from Clinton’s goals at the summit.

Since the President’s return, however, the matter took on such urgency that Sessions was asked to cut short the Chicago trip to meet with Reno, Deputy Atty. Gen. Philip B. Heymann, Associate Atty. Gen. Webster Hubbell and White House Counsel Bernard Nussbaum.

Sessions, a former federal judge from Texas, is nearly six years into the 10-year term to which he was appointed by Reagan in 1987. Although the term was established by Congress, the FBI director serves at the pleasure of the President.

As recently as several days ago, two of Sessions’ fellow Texans, former Democratic Party Chairmen Robert S. Strauss and John White, met with him in Strauss’ Washington law office and advised him to resign rather than be dismissed, a knowledgeable source said.

“He was troubled and indicated he knew he had no hope of staying on as director,” the source said. “But he felt strongly about protecting the integrity of the FBI and said he wanted to speak out against politicizing the bureau.”

Sessions has contended that last January’s ethics findings by the Justice Department’s Office of Professional Responsibility, which criticized him sharply, were adopted by Barr for political reasons. The director has speculated that the report was inspired by conservatives, both within and outside the agency, who were alienated by his efforts to extend employment opportunities to women and minorities.

Strauss and White reportedly advised Sessions that if he wanted to help the FBI, he could do it better by speaking out after resigning.

The ethics report criticized Sessions for allegedly abusing his office with improper personal benefits and travel “perks,” but White House officials are known to regard Sessions as “foolish, not corrupt,” as one put it.

Inside the FBI, many agents and officials are known to resent Sessions’ attacks on the report’s credibility because the investigative work--while directed by Justice Department lawyers--was performed by experienced FBI agents.

The report said Sessions had repeatedly misused his FBI airplane for personal travel, including trips with his wife to visit relatives in distant places.

In addition, he allegedly abused other perks, such as avoiding payment of taxes on the value of his chauffeured limousine by declaring it to be a police vehicle, which required him to be armed while riding in it. But he adopted a “sham” arrangement, the report said, by putting a pistol in his briefcase while locking the briefcase in the trunk.

The report also said he misused government funds to build a “privacy fence” around his home and that he refused to answer questions from federal investigators about an apparent “sweetheart deal” on a $375,000 home mortgage he received from a friend at Riggs National Bank in Washington.

The White House earlier this year characterized the findings as “disturbing.”