Charles P. Taft, a former Mayor of Cincinnati, a founder of the World Council of Churches and a son of President William Howard Taft, died at a residence for the elderly in Cincinnati Friday morning. He was 85 years old.

Mr. Taft, who served on the Cincinnati City Council for 32 years before his retirement in 1977, was a key figure in the redevelopment of downtown Cincinnati in the 1960's. According to family members, he was especially proud of having played a leading part in the construction of the Riverfront Stadium, home to the Cincinnati Reds and the Cincinnati Bengals football team.

As a young lawyer, he was one of a group of reformers who opposed the city's political machine and established a home-rule charter that made Cincinnati the first major city to adopt the city manager form of government. Appointed to Federal Posts

Mr. Taft never ran for Federal office, but was appointed to several Government jobs in Washington in the 1940's and 1950's. He was defeated as the Republican candidate for Governor of Ohio in 1952 by Frank Lausche, a Democrat.

A spokesman for the World Council of Churches described Mr. Taft as one of the most prominent laymen of the Episcopal Church in the United States.

In 1947 and 1948, Mr. Taft served as the first lay president of the Federal Council of Churches of Christ in America, the predecessor of the National Council of Churches of Christ in the U.S.A.

He was a member of the provisional committee that established the World Council of Churches at a meeting in Amsterdam in 1948. He attended council meetings throughout the world, serving for seven years, until 1961, as chairman of the committee that directed news and publicity for the council.

He was born Sept. 20, 1897, in Cincinatti, the son of William Howard Taft, the 27th President and the 10th Chief Justice of the United States, and Helen Herron Taft, the daughter of a lawyer.

Mr. Taft, unlike his brother, Senator Robert A. Taft, Republican of Ohio, was outgoing and easy in manner. He did not rely on his father or his brother's reputation, but adhered to his own brand of liberal Republicanism. Favored World Organization

Like his father, he favored world organization, and expressed regret that the United States did not join the League of Nations. Mr. Taft moved in 1980 into the Marjorie P. Lee Home, which is affiliated with the Episcopal Church. Until then he practiced law and broadcast a five-minute daily radio program of commentary, ''Charles Taft Zeroes In.''

Mr. Taft was an avid fly fisherman most of his life. One of his trademarks was a canoe on the roof of his car, which he would take down and slip into a stream whenever he found spare time. He continued to go fishing, his family said, until about a year ago.

Mr. Taft leaves two sons, Seth, of Cleveland, and Peter, of Los Angeles; three daughters, Eleanor Hall of Seattle, Sylvia Lotspeich of Philadelphia and Cynthia Morris of Washington, D.C.; 13 grandchildren and 15 great-grandchildren.

Mr. Taft attended public school and in 1913 was graduated from the Taft School at Watertown, Conn., founded by his uncle, Horace Taft. He attended Yale, where he was tackle on the varsity football team and won the Gordon Brown prize for manhood, scholarship and leadership.

As short time after enlisting in the Army in 1917, Mr. Taft married Eleanor K. Chase, a daughter of the president of the Ingersoll Watch Company. She died in 1961.

Mr. Taft left the Army as a first lieutenant and returned to Yale, where he received a bachelor of arts degree in 1918 and his law degree three years later. He spent a year coaching football at Yale and in 1922 formed the law firm of Taft & Taft with his brother in Cincinnati.

Two years later, Charles became a member of the firm of Taft, Stettinius & Hollister. A man with an infectious smile, he found that his legal opponents would complain: ''Charlie smiled me out of court.'' He served as Hamilton County prosecutor in 1927 and 1928 and wrote a book, ''City Management.'' Several others were to follow. Mr. Taft worked throughout much of his life to harmonize private philanthropy and public social programs in housing, sickness and juvenile delinquency. Active in Fund Raising

As a young lawyer in Cincinnati he became involved in Community Chest and church fund-raising efforts and the welfare services of the Young Men's Christian Association. In 1925, he was the youngest president of the International Y.M.C.A.

In the early days of World War II, he helped set up U.S.O. centers for service personnel. In 1944, he served as director of the Office of Wartime Economic Affairs in the State Department and the next year he was put in charge of the department's office of transportation and communication. In 1945 he also served as an adviser to the American delegation to the San Francisco Conference, out of which came the United Nations.

In 1953 Mr. Taft served as president of the Committee for National Trade Policy. A memorial service will be held at Christ Church in Cincinnati on Tuesday at 2 P.M.