Published: September 9, 1981

William York Tindall, the James Joyce scholar who taught at Columbia University for 40 years, died yesterday in Salisbury, Md. He was 78 years old.

Professor Tindall taught Joyce's ''Ulysses'' in the late 20's while the book was still banned in this country. He considered ''Ulysses'' the ''greatest novel of the 20th century, including Proust and everyone else.'' He was president of the James Joyce Society for many years and occasionally led groups of scholars around Joyce's Dublin.

It was in 1925 that, fresh out of Columbia College, he set off to see the world. His first stop was Paris, where he bought a copy of ''that dirty book -'Ulysses.' '' The day he did so happened to be June 16 - known to Joyceans as Bloomsday, the day of Leopold Bloom's adventures in the novel. ''I went straight to Luxembourg Gardens and read the final chapters,'' he later recalled, ''and discovered that it wasn't a dirty book but a fascinating one.'' One Chained Copy His interes t in Joyce flourished. He went through Joyce's earlier works. Back a t Columbia for graduate study in 17th-century English, he supported himself by teaching a course in modern literature at NewYork Universi ty. In 1928, he introduced ''Ulysses'' into the course. ''The dean of the school had one bootlegged copy,'' he said, ''which he chained in the library, and students would read the chained edition.''

Professor Tindall began his career at Columbia in 1931, where he remained until his retirement in 1971. For many years, his office number was 616 Philosophy Hall. He said it took him five years to notice, but then it seemed inevitable - the number marked Bloomsday, the sixth month, the 16th day.

Professor Tindall's seminar on ''Finnegans Wake'' and other Joyce works made him one of the most popular professors in the English department. Students who filled his classrooms admired his wit and style. Some also admired his talents as a bicyclist around the campus. Reading by Committee

His technique, as it later emerged in his ''A Reader's Guide to Finnegans Wake,'' was to gather a small group of graduate students together ''in the belief that a committee, reading the text, talking it over, and bringing to it a variety of languages and learning, might do more with the book than I alone, with small learning and less Greek.'' His approach was to work his way through the four parts of the ''Wake'' chapter by chapter, picking o ut those words and paragraphs that were ''essential for knowing what is going on.''

Professor Tindall wrote 13 books on British authors, including four on Joyce. He also wrote books on Samuel Beckett - whom he nominated for the Nobel Prize - and W.B. Yeats, Wallace Stevens, D.H. Lawrence and Dylan Thomas.

Born in 1903 in Williamstown, Vt., Professor Tindall lived for many years on Claremont Avenue, near the Columbia campus. Surviving are his wife, Cecilia; a daughter, Elizabeth Garrett Layton of Salisbury, Md., and two grandchildren.

A service will be held Oct. 23 at 2 P.M. in St. Paul's Chapel at Columbia.