The famed Southern Crescent passenger train which last year carried more than 165,000 passengers between Washington and New Orleans, was given new life yesterday by the Interstate Commerce Commission.

Scheduled for discontinuance by Southern Railway, which claims the century-old run is losing more than $500,000 a month, the ICC yesterday ordered the operation continued for at least one more year. The Crescent is the last famed passenger train in America operated by a private enterprise.

Southern had petitioned to end the service on April 6 but the ICC, which must approve any discontinuance of passenger train service postponed the effective date four months while public hearings on the effects of the closing where held in 21 cities along the train's route.

The Crescent travels daily between Washington and Atlanta, and three times weekly between Atlanta and New Orleans.

ICC Chairman Dan O'Neal in annoucing the commission's decision, said Southern will have to refile a request to discontinue if it still wants to end the service after August 4, 1979.

But the Commission expressed hope that an arrangement could be developed between Southern and Amtrak "that would make possible a continuation of rail service after the commission's one year of required service."

The official ICC announcement wasn't expected unitl Sunday, but yesterday's advance announcement was made to allow the traveling public to make plans for the rail service which would have otherwise ended Sunday night.

Although the commission said Southern "should not be expected to sustain the losses involved here indefinately," it added that since southern was one of the new financially healthy railroads "continued operation for this period should not unduly burden interstate commerce."

The ICC action came by a 4-3 vote, with the three dissenters' preferring that service end on Dec. 31, 1978.

Southern Railway spokesman Arnold McKinnon released the following statement after the ICC decision was announced.

"We are shocked and disappointed by the ICC's action. It is particularly surprisingly in light of the heavy losses being sustained by the train, or the strong showing that was made in justification of discontinuance of the demonstrably low and declining use being made of the train over the long term."

McKinnon said the railroad is now considering "what other remedial courses may be left open to us."