The giants of the long-distance telephone business have called a truce in their latest legal war.

Washington-based MCI Communications Corp. and American Telephone & Telegraph Co. said yesterday that they have settled a series of lawsuits in which AT&T accused MCI of pirating its customers and each company charged the other with making false advertising claims.

Both companies refused to comment on the terms of the out-of-court settlement. Observers said it was unlikely that the agreement involved a large amount of money, if any, because the companies would be required to publicly disclose a material award or payment.

And neither company said it intended to change its advertising, which has often attacked the other's service and prices.

The settlement marks a respite in one of the nastiest marketing battles in American business.

AT&T, which controls about 70 percent of the long-distance market, has sought to portray MCI and other long-distance carriers as unreliable. One of its recent commercials implies its rivals engage in deceptive marketing, and encourages customers to "get it in writing" when promised lower rates and greater convenience than AT&T provides.

MCI, which has a 16 percent market share, shot back with ads that poke fun at its much-larger competitor. In one of the ads a woman falls over after getting her AT&T bill.

MCI charged last fall that AT&T's ads were "false and deceptive"; AT&T counter-sued in January with a nearly identical complaint.

Yesterday, the rivals announced that they would jointly propose a series of steps to curtail one of the practices alleged in the legal cross-fire -- the pirating of each other's customers through an unethical sales technique known as "slamming," or arranging for customers' long-distance carriers to be switched without permission.

AT&T had charged in a suit last January that MCI was giving false information to AT&T customers in an attempt to win their business and in many instances ordering service to be switched from AT&T to MCI without customer authorization. MCI denied the charges, but said yesterday that some customer accounts were switched due to misunderstandings and "overly aggressive" sales techniques common in the industry.

Neither MCI nor AT&T stood to gain from a trial on the suits because further publicity over the charges and countercharges would have made both "look like a bunch of crooks," said Bill Deatherage, a telecommunications industry analyst at Dean Witter Reynolds Inc. in New York.

"AT&T scored some points against MCI with its {pirating} suit and its ads, but whatever marketing advantages they had are behind them now. The best AT&T could say is, 'We weren't as bad as the other guy,' " he said.

The companies said they would urge the Federal Communications Commission to adopt rules that ensure phone customers are switched to a new carrier only with their permission.

The proposed rules require customers to sign an authorization card, call a special 800 number or their local phone company, or have carriers hire a third party to verify that the switch was requested.

"Slamming" appears to be a growing problem in the hotly competitive $60 billion long-distance market. Bell Atlantic, which operates the local phone service in the Washington area, estimated in October that it will get 80,000 slamming complaints this year -- up from 18,000 in 1988.

Local phone companies currently rely on assurances from long-distance companies that a customer wants to make a change of carriers before pushing the buttons that switch an account from one company to another.

MCI and AT&T have been the industry's most aggressive telemarketers -- the sales method most often cited as leading to slamming abuses -- with MCI calling about 7 million people a year to convince them to switch services and AT&T calling about 5 million.

Despite the settlement, Merrill Tutten, AT&T vice president of consumer services, said his company wouldn't be bound by the proposed anti-slamming steps until the FCC approves them or another set of measures.

MCI said it would get independent verification for any changes it makes in the future.

Richard Firestone, chief of the FCC bureau responsible for regulating phone services, said the agency "looked favorably" upon the MCI-AT&T proposal but the commission would hold hearings to determine if the proposal was fair to competitors and phone customers.

An AT&T spokesman said ending unauthorized switching could save the company "tens of millions of dollars of revenue."

MCI and AT&T have a long history of legal antipathy dating back to the 1970s when MCI, then a tiny start-up company, launched a legendary antitrust suit challenging AT&T's monopoly on long-distance service.

The intense competition and weakening American economy have taken their toll on MCI, however, with the company estimating that its fourth-quarter revenue will be flat.

In trading yesterday, MCI closed down 12 1/2 cents at $20.12 1/2 per share. AT&T was up 87 1/2 cents to $30.37 1/2.