A federal judge yesterday cleared the way for a vote on the sale of Woodward & Lothrop Inc. to Michigan real estate developer A. Alfred Taubman.

U.S. District Judge Joyce Hens Green refused to stop a special shareholders meeting scheduled for 10:30 this morning to vote on Taubman's $220 million offer to buy Woodies, one of the nation's last independent department store chains.

At the same time, Green rejected a request by opponents of the takeover to stop Taubman from voting his recently acquired 1.8 million shares -- 32 percent of all Woodies outstanding stock -- in favor of the merger.

As a result, financial analysts said this gave Taubman a clear advantage in his hotly contested bid to buy all the stock in the 16-store chain for $59 a share.

However, Wall Street sources last night indicated that rival bidder Monroe G. Milstein, chairman of the Burlington Coat Factory Warehouse Corp., was actively trying to buy up as many shares of Woodies stock as he could to block the Taubman deal. Milstein has said that if the Taubman offer falls through, he will pay $62.40 a share to buy the firm. Nearly 120,000 shares were traded yesterday, an unusually high amount for Woodies stock.

Under D.C. law, the merger requires approval by owners of two-thirds of Woodies' stock. With Taubman free to vote his stock, only a simple majority of remaining shares will be needed to ratify the transaction.

As a result, analysts believed that Milstein's chances to block the Taubman deal were slim. "It is a real long shot," said one analyst, who declined to be named. "He needs too many shares -- 1.8 million -- to block the deal. I don't think he has that many."

Milstein has the support of descendants of the company's founders, who control more than 562,000 shares -- or 10 percent -- of the outstanding stock. This group, which formed the Woodward & Lothrop Shareholders Protective Committee, filed the unsuccessful legal action to block the sale. It claimed that the Taubman offer was inadequate and only benefits Woodies' top three executives, who stand to gain a large stake in the company under the Taubman offer. The executives would have the option to purchase 20 percent of the company for $5 million.

The family members claim that shareholders should hold out for a higher offer, such as Milstein's $62.40-a-share proposed bid. If Taubman's offer is rejected by shareholders, Milstein has said he has financial commitments for the $343.2 million he has offered to buy Woodies. Milstein, however, has refused to make a cash offer for the stock and try to outbid Taubman.

Calvin Cobb, attorney for the dissidents, said yesterday that he had no comment on the judge's decision; Milstein was unavailable.

Woodies Chairman Edwin K. Hoffman called the judge's ruling "a magnificent decision . . . it's fantastic." Hoffman has argued that Milstein's bid is not firm and may not win shareholder approval because Taubman effectively could veto the bid with his control of nearly one-third of the stock.

Hoffman said the company may not know before Thursday whether the Taubman deal has been approved.

The offer received last-minute support yesterday from the United Food and Commercial Workers Union Local 400, which urged its members to vote their shares in favor of the Taubman purchase. "We never got into this kind of a fight before," said Thomas R. McNutt, the president of the local that represents Woodies' workers. "But protecting our jobs is paramount."

McNutt said Taubman has made clear that his intention is to continue operating Woodies as a leading retailer. "This will obviously establish some job security for the 8,000 employes of the chain," McNutt said in a letter to Woodies employes. McNutt said a substantial number of Woodies' staff members, especially the longtime employes, own Woodies shares.

Judge Green rejected the dissident shareholders' requests for preliminary injunctions to stop the meeting and prohibit Taubman from voting his shares, because she said she could find no legal basis to interfere with "the democratic vote of all the shareholders, the heartbeat of this corporation."