A federal appeals court ruled yesterday that Virginia will have to liberalize restriction on Medicaid funding of abortions until the state Board of Health perfects its present "ambigous" policy.

The Board of Health adopted last year a controversial amendment to its Medicaid regulations, restricting state aid for abortions to pregnancies that endanger the life of the pregnant woman.

Later policy statements by the board and health department officials, however, appeared to permit doctors to certify patients for Medicaid abortions if they believed the pregnancy posed a substantial danger to the patient's health.

A three-judge panel of the 4th U.S. Circuit Court of appeals unanimously held that these changes created a policy that was illegally ambiguous under terms of federal Medicaid laws.

The appeals court directed U.S. District Court Judge Oren R. Lewis in Alexandria to order the state to adopt a policy of funding abortions of pregnancies that pose a "substantial endangerment of health" rather than "endangerment of life."

It also directed Lewis to require the state to permit doctors to consider "all factors - physical, emotional, psychological, familial, and the women's age - relevant to the well-being of the patient" when deciding whether the pregnancy poses a health danger.

Lewis had upheld the state policy after ruling that it conformed to U.S. Supreme Court decisions.

In overturning Lewis, the appeals court did not decide the larger issue of whether the state must permanently fund medically necessary abortions according to the standards it set out for Lewis. Instead, the opinion left it open the state board to try to readopt a more restrictive policy.

A spokesman for the state health department said the board will take no action until it gets a formal order from Lewis.

Lynn Miller, a Washington lawyer for an anonymos plaintiff who challenged the Virginia policy, said no decision on further legal action will be made until the appeals court ruling is studied, or perhaps until the health board takes a new policy action.