The captain of the USS Dubuque is being relieved of his command and ordered to prepare for military court-martial proceedings because of his failure to rescue a boatload of Vietnamese refugees, Pentagon sources said Friday.

Some of the refugees claim they resorted to cannibalism to survive on the high seas after the Dubuque failed to rescue them.The Pentagon sources, who agreed to discuss the matter only if not identified, said Capt. Alexander G. Balian was notified of the Navy's decision on Friday.

Balian has 10 days to appeal the decision regarding his command to Vice Adm. George W. Davis Jr., the chief of surface ships in the Pacific Fleet. Because Balian's loss of command "for cause" is considered a permanent blight on an officer's career, any appeal will go directly to the chief of naval personnel in Washington.

The site of the court-martial proceedings, meantime, has yet to be selected, but Balian has been told to begin preparing for an Article 32 hearing - the rough equivalent of a civilian grand jury proceeding and the first step in a military court-martial, the sources said.

However, a spokesman for the Naval Surface Force U.S. Pacific Fleet in San Diego said the Navy still was investigating the incident and hadn't decided yet whether to take further action against Balian.

Senior Chief Petty Officer Steve Hinney also said Rear Admiral Geoffery L. Chesbrough, commander of the Naval Surface Group, Western Pacific, has been ordered to direct an investigation out of the Philippines into the matter.

"Rear Admiral Chesbrough will review the information available and make a determination as to whether or not any kind of further action is warranted," Hinney said.

Balian, 48, was relieved temporarily of his command of the Dubuque on Aug. 13 pending the outcome of a Navy investigation. That investigation ended a week ago with the captain being charged with dereliction of duty and ordered to appear at an admiral's mast.

In an admiral's mast, an admiral serves as the lone judge and presides over a closed-door administrative proceeding.

Last Tuesday, Balian exercised his right to refuse the admiral's mast, forcing the Navy to decide whether it wanted to escalate the matter to the level of a court-martial or to simply drop the charges.

On Friday, according to the sources, Davis served Balian with notice of his loss of command and ordered the Article 32 investigation.

Balian has been charged with violating a general Navy regulation "by wrongfully failing to render appropriate assistance to Vietnamese refugees found on the South China Sea on June 9, 1988, in danger of being lost."