The confessed murderer of four Capitol Hill residents was granted a conditional release from St. Elizabeths Hospital yesterday by a D.C. Superior Court judge under strict conditions that will allow him to attend college preparatory classes.

Charles G. Woodard, 32, has been confined at the John Howard Pavilion for the criminally insane since May 1975 after a Superior Court jury found him innocent by reason of insanity of the 1973 slayings of a Southeast Washington couple and a young woman and her 2-year-old son who lived with them.

"Possibly more than anyone else at John Howard, he's a good risk," said Dr. Robert K. Madsen, a staff psychologist at St. Elizabeths who testified during a lengthy hearing yesterday before Judge Fred B. Ugast.

"He's been confronted with the reality of having killed four people and he wants to put that behind him," Madsen told the court.

Woodard has made "great strides in controlling his behavior" although he can become anxious and withdrawn under pressure, Madsen said. Madsen testified for the government -- which opposed Woodard's release -- yet he supported such a plan, provided it was carefully supervised.

"I think it would be to his benefit and all our benefit to give him that chance," Madsen said.

In a letter to the court in October, officials at St. Elizabeths said that in their opinion Woodard "has recovered sufficiently from his mental illness to be granted a conditional release without danger to himself or others..."

"He's gone about as far as he can go in the hospital and we want him to take the next small step," said Dr. Wayne London, a staff psychiatrist who has treated Woodard since May.

Woodard has been diagnosed as a paranoid schizorphrenic, but doctors say that the disease is in remission.

London testified yesterday that Woodard earned a high school equivalency diploma while in the hospital and has been working part time as a clerk in the hospital's clothing warehouse, where his supervisor considers Woodard able enough to move into the competitive employment market.

Woodard, who is free to move around the grounds of St. Elizabeths from 9 a.m. to 9 p.m., has been responsible about his privileges and also about taking drugs administered as part of his psychiatric therapy, London told Ugast.

While on conditional release, London said, Woodard will continue to live at John Howard. Woodard, who asked the court for release before the hospital made its recommendation, attended yesterday's hearing with his attorney, R. Kenneth Mundy.

Assistant U.S. Attorney Mark Biros told Ugast that the government opposed any release for Woodard at this time because, he said, Woodard continues to show signs of potential dangerousness.

Biros presented evidence that in 1977 Woodard became upset in a hospital recreation room, threw pool balls around, breaking a television set and a window and then held a doctor hostage until a hospital administrator was called to calm him.

Late in the hearing yesterday, Biros called Woodard to the witness stand.