Interior Secretary James G. Watt yesterday gave the approval that clears the way for groundbreaking and construction of the Vietnam Veterans Memorial in Constitution Gardens.

In a carefully phrased letter to Jan C. Scruggs, president of the Vietnam Veterans Memorial fund, Watt approved a plan that will add a statue and flagpole to Maya Lin's abstract, V-shaped design chosen in a competitive search. These changes were part of a compromise worked out between proponents and critics of Lin's original design. Critics of the Lin design want a more traditional, heroic monument and have said the initial design represents a statement of shame and dishonor.

Still to be resolved is the controversial question of where the statue and flagpole will be placed in the memorial design. Watt wrote that his approval came with the "understanding" that changes also will be made in the inscription for the memorial. This inscription, he wrote, should "add better and proper language bringing honor to all the 2.7 million who served in Vietnam."

Groundbreaking at the memorial site at Constitution Gardens originally had been scheduled for March 1 with dedication of the memorial on Veterans Day in November. Watt had postponed construction while waiting for approval of the design compromise by the National Capital Planning Commission (NCPC) and the Fine Arts Commission.

Both review bodies have approved the concept but left unresolved the key question of where the new elements will be placed.

The NCPC approval placed the statue "within the area before the apex of the memorial." Earlier this week J. Carter Brown, chairman of the Fine Arts Commission, suggested in a letter to Watt that the statue and flagpole serve as an "entry point" for the memorial in the area that would contain a directory to help visitors locate the names of 57,000 Americans killed and missing in Vietnam. The names on the memorial will be listed in the order in which they died.

An Interior Department spokesman said Watt in his letter indicates that decision on the size, type, and siting of the statue will have to be recycled through the review process for approval by the NCPC and Fine Arts Commission before the dedication of the memorial.

Yesterday, representatives of veterans groups met in a closed session to take the first step toward reaching agreement on the design modifications.

Sen. John Warner (R-Va.), who was instrumental in working out the design compromise in January, invited some 60 representatives from the Vietnam War Memorial Fund and veterans groups that have been critical of Lin's original abstract design.

The group was shown slides from the original design entries that incorporated a sculptural element.

Robert Doubek, project director for the Vietnam War Memorial Fund, returned to his office from the meeting to find Watt's letter waiting. He said the group will have an announcement on the memorial construction tomorrow.