Norfolk Southern Corp., the new railroad holding company to be formed following government approval yesterday for a merger of Southern Railway and Norfolk & Western Railway, will locate its corporate headquarters in Norfolk.

Immediately following expected Interstate Commerce Commission backing of the combination, the rail firms said Norfolk was picked because of an "ideal location . . . with excellent transportation, communications and residential facilities."

In Norfolk, city officials said they had been told that about 70 top executive jobs are involved, including the rail firm's chairman and president, still to be named. Norfolk Southern will occupy two floors of the Virginia National Bank building.

Vincent Thomas, Norfolk's mayor, said Norfolk Southern's decision to place its corporate headquarters in his city represented a "quantum leap" in city development efforts. "Their move adds to our significant evidence of progress. It is a recognition by a major national company of the growing importance of Norfolk, the hub city of Hampton Roads," he added.

Although Southern will maintain its operating headquarters in the District and N&W will continue to have large central offices in Roanoke, Norfolk will become the location for regular meetings of directors and for overall sales-marketing, planning and financial supervision of the two rail firms. Spokesmen for the companies said they expect the holding company to be in business soon after the 30-day waiting period that began with ICC approval yesterday. A possible start-up date mentioned was June 1.

N&W President Robert Claytor and Southern President Harold Hall, two likely candidates for the top two jobs in Norfolk, said in a joint statement yesterday that ICC approval of their merger means a single rail system spanning 21 states and D.C. can provide "even better service and market opportunities to shippers than each railroad has been able to deliver separately, and we hope to gain additional traffic . . . "

The combined firm will have more than 42,000 employes and a payroll in Virginia alone that exceeds $225 million a year. Consolidation and modernization has been planned at six locations in Virginia where the railroads now intersect--Bristol, Altavista, Danville, Lynchburg, Norfolk and Norton. One major project will be faster coal service from mine areas to the Virginia port.

ICC Chairman Reese Taylor Jr., announcing his agency's unanimous approval for the merger, said a primary benefit will be creation of a single system "positioned to meet the growing demand for interregional rail transportation service between points in the East and Midwest and points in the Southeast."

Rail users should get "faster and more reliable service," he asserted. He also noted that the ICC approved the combination more than a year in advance of the July 2, 1983, statutory deadline. Under federal law, the ICC must act on merger cases within 31 months, and the proposal was filed in December 1980.