The Alexandria City Council, after almost two years of debate and controversy, appears set to give final approval this month for construction of 57 town houses on land contaminated with arsenic.

The issue of what to do with the two acres of arsenic-contaminated property near the Alexandria waterfront serves to illustrate one of the problems older cities face as their character changes from industrial to commercial and residential. The Alexandria waterfront, once a busy port, has been undergoing such a change.

A herbicide manufacturer, the R. H. Bogle Co., deposited arsenic on the ground for years. Other chemicals contaminated the soil when the site was converted by Bogle into a storage facility and workmen washed off the train cars used to transport the chemicals.

Roger Machanic, president of Development Enterprises, Inc., which wants to build the town house cluster on the property, said he expected to assume title to the land this week for a price close to $1 million.

The land is on Lee Street between Oronoco and Pendleton Streets.

In addition to approving plans for the project by Development Enterprises Inc., the Council also is expected to give final approval to a similar 46-town house cluster development on land abutting the Bogle tract to the west. A third town house project just to the south already is well under way.

Although all three sites and others in the area are contaminated with arsenic, mercury and other chemicals, the controversy has centered almost exclusively on the Bogle property because it is there that tests by the state's Water Control Board have shown arsenic concentrations to be highest.

The federal government requires that health precautions be taken in areas where arsenic concentrations exceed 200 parts per million. Tests have shown that a portion of the Bogle tract has arsenic levels which exceed 30,000 parts per million.

After newspaper articles disclosed on February, 1976, that the area was contaminated, a tax covering was placed on the land to keep the soil from blowing around and to prevent more soil from washing into the Potomac.

In the past year, the City Council has passed several ordinances regulating construction on the contaminated areas. The planning commission last month recommended approval of a request by Development Enterprises Inc. and Oronoco Street Associate Inc. that the area be rezoned from industrial to residential so they could build the two town house clusters under guidelines to be monitored by the city's health department.

According to the guidelines worked out by state and city health officials, the new town houses will be built on pitings and will lack basements. The entire site is to covered with 18 inches of compacted, iron-rich clay plus a six-inch layer of topsoil, gravel, or vegetable material. Officials say this will have the effect of sealing off the poisoned soil.

Water pipes and electrical lines are to be laid in fresh soil and will be encased in the protective clay, according to the guidelines. The developers have agreed to warn homeowners not to dig into the clay unless it is essential and then to do so only instructions provided by the health department.

"The city government has gone to rather unusual lengths to protect everyone involved," City Manager Douglas Harman said in an interview.

Standing alone against the officials from the federal, state and Alexandria governments is Ellen Pickering, a maverick councilwoman and envirmentalist who insists that the plans are ill-conceived and wants the city to seal the land with the iron-rich clay and then convert it into a park.

Pickering has also charged that residents of the town houses would eventually come into contact with the arsenic. "Trying to keep (the clay) from being breached is going to be almost impossible," she said. That contention is disputed by the developer, who says most of the area will be covered over and residents will be able to dig only along the plant edging surrounding their brick patios.

Checks with six of the city's seven Council members last week indicated that the Council will approve the planning commission's zoning recommendation when the matter comes up for a final vote late this month.

The arsenic pollution is one of several problems associated with developing the city's waterfront, where large parcels of land stand vacant.

Chief among the obstacles is a longstanding dispute between the city and the federal government over ownership of the land. Once that dispute is resolved in a pending court case, development is expected to accelerate.

Only five facilities along the waterfront are still used for industrial purposes.These are the huge Potomac Electric Power Co. plan just north of the historic Old Town district, a Virginia Electric and Power Co. substation, two facilities of the Robinson Terminal Co., where newsprint for The Washington Post is stored, and the Norton rendering plant.

A torpedo factory built during World War I has been purchased by the city and is now partly converted into artists' studios and galleries pending a final decision on what to do with the huge installation.

Christopher Pine, who studies the waterfront for the city's Department of Planning and Community Development, said the torpedo factory is another example of a problem caused when a large facility is no longer used for industrial purposes.

Pine said the plant has such heavy foundations and thick walls that it has proved too costly for the city to tear it down, as proposed by some who feel the huge complex is incompatible with a mostly residential or open space waterfront.

Once the title dispute between the city and federal government is resolved, land values along the waterfront are expected to rise sharply, thereby fueling the debate between advocates of a federally-funded national park and those who prefer the tax benefits that would be generated for the city with private development of the area.

The proponents of a national park won a small victory last week when the Parks and Recreation Commission voted 5 to 1 to recommend that a park be built along most of the waterfront.