More than $8 million in federal funds was approved yesterday to finance seven community improvements projects in D.C., including four neighborhood parks, street improvements in Southeast Washington and modernization of more than 500 public housing units.

A city spokesman said that approval of an additional $1.2 million to pay for two other projects is expected next week, bringing to $10 million the amount of money the city will receive under a public works employment bill passed by Congress last year.

Terry Peel, chief of the city's capital improvements division, said the federal funds are earmarked for areas of high unemployment. More than 520 construction jobs in private industry should be created by the projects, which are expected to begin within 90 days, he said.

The projects for which funds were approved yesterday by the economic development administration of the Commerce Department include:

A street construction program in the Fairlawn neighborhood of southcast Washington, in an area bounded roughly by Pennsylvania Avenue., Good Hope and Naylor Roads, and Interstate Hwy 295. Paving and gutters will be installed at an estimated cost of $1.5 million.

Four neighborhood parks will be constructed in Northwest Washington, at a cost of $1.7 million each in conjunction with housing developments already planned or underway. The parks will be at Florida Avenue and 1st Street NW; O Street and New Jersey Avenue NW; 6th and N Streets N and 14th and Girard Streets N.

The city will modernize the interior of 558 public housing units in the Valley Green housing project at Valley Avenue and Wheeler Road SE and the Highland housing project at 8th Street and Valley Avenue SE. The modernizations will cost 2 million.

The 8th Street portion of the "Streets for People" program will be carried out along that street between E and F Streets NW. Modernization will include landscaping and erection of permanent vending stands. The project will cost $1.4 million.

The O Street retaining wall, a concrete wall to be constructed along that street between Carpenter Street SE and Branch Avenue, Will be built. It will cost $2.2 million and is designed to protect the streets, pedestrians and homes below from the effects of soil erosion.

In addition, the city expects approval next week of $900,000 to build a play area at the national Children's Island project, a bicentennial project being carried out on an old landfill site near RFK Stadium.

Approval also is expected next week of a $300,000 allocation to pay for roof replacement and basement restoration at the Eastern Market, located at 225 7th St., SE.