In a move with major implications for development in the District of Columbia and suburban Maryland, mayor Marion Barry yesterday withdrew former mayor Walter Washington's controversial decision to unilaterally seize a bigger share of the regional sewage treatment plant at Blue Plains.

Washington had made his post-election decision late last year in the increasingly competitive regional atmosphere in which sewer capacity is equated with development, which in turn means local tax revenue.

In the District of Columbia, which is in the midst of a major building boom, more than $1.3 billion worth of major developments are planned All this development would require sewer capacity, and by last November the city had left only 1.9 million gallons of its 135-million-gallon-a-day capacity at Blue Plains.

A single major project -- such as a proposed Marriott hotel on Pennsylvania Avenue -- would require about a tenth of Washington's remaining treatment capacity.

In U.S. District Court yesterday, where the city had been haled by an angry suburban Maryland, the District of Columbia's acting corporation counsel, Louis P. Robbins, told Judge John Lewis Smith Jr.:

"If no one will give us any more, we will not exceed 145 million gallons (the city's share of the current agreement) without permission of the court."

Robbins said he was there "under the express direction and instructions of Mayor Barry."

Robbins won the agreement of the competing jurisdictions for a top-level conference that will try to settle the controversy over sewer capacity outside the courtroom.

The conference, scheduled to begin next Thursday, will center on the District of Columbia's problems, but it also could lead to resolution of the quarreling between Montgomery and Prince George's Counties. To continue its development Montgomery needs a new sewer plant, but it has encountered resistance from Prince George's County on financing arrangements.

Potentially involved in Montgomery County are continued residential and commercial-industrial development along two major highways -- Rte. 29 in the east and Interstate 270 going north.

New sewage capacity also is necessary for the massive redevelopment around the Silver Spring Metro station and the planned transformation of the eastern rural sector along Rte. 29 into the county's major new concentration of light industry and low-and moderate-cost housing.

At the U.S. court hearing yesterday, the Washington Suburban Sanitary Commission made a conciliatory move, withdrawing its motion seeking to have Judge Smith cite the District of Columbia for contempt.

In yet another conciliatory move, Prince George's County Attorney Robert B. Ostrom told the court, "We recognize the District of Columbia may have a problem and Prince George's may have a solution." Accorking to D.C., Prince George's has 20 million gallons worth of capacity which it is not using now and will not need for the foreseeable future.

Smith, relieved he will not have to continue refereeing the regional feuding -- at least while the summit conference is in progress -- said:

"This is one of the most amicable and encouraging meetings we have had in a long time.. For the first time, I think all the parties are on track."

The agreement also was hailed by area businessmen.

"We think this is exactly the way to do it -- get it out of the courtroom," said John R. Tydings, executive vice president of the Metropolitan Washington Board of Trade. "This is one of the most serious problems affecting the economic potential of this community. We know the damage that a sewer moratorium can do to the community."

"This is very constructive," said Robert M. Gladstone, president of Quadrangle Development Co., which, in partnership with the Marriott Corp. plans to build a complex on Pennsylvania Avenue that will include an 800-room hotel, half a million square feet of commercial space and 100,000 square feet of retail space.

"We would be deeply concerned if a substantial project couldn't go ahead because there were no sewer hookups. It is a matter of life or death for a developer," Gladstone said.

The summit, the first to be held since 1974, when the present treatment-sharing agreement was signed, will wrestle with the District's contention that it is entitled to more than 135 million gallons daily because the Maryland suburbs did not carry out their written promise to build another regional plant that the city could use.

Who gets how much sewer capacity has far-reaching implications -- especially for Washington. In the downtown area alone, according to a recent analysis by the Metropolitan Washington Board of Trade, more than 50 major projects worth more than $1.3 billion are planned. The projects, which include new construction and renovation, would provide the potential for more than 23,000 permament jobs, the board said.

Elsewhere throughout the city -- along the Georgetown waterfront, at Fort Lincoln and in the Shaw, 14th Street NW and H Street NE renewal areas -- a number of projects either are under way, committed or in an advanced stage of planning.

When he informed suburban Maryland last November that the city would take 5 million gallons a day of additional capacity, then mayor Washington stated his motivation plainly:

"... the District can no longer underwrite the development of other jurisdictions by gambling with its own share of that growth."

Through the 1960s and most of the 1970s, D.C. saw the suburbs thrive on new development -- some of it resulting from a flight of people and business from the city.

In the minds of some of Mayor Washington's highest officials, the sewer agreements that enabled the suburbs to grow but later threatened development in the District were drawn up in an era when the city was guided by what one high-ranking aide called a "colonial government."

After suburban Maryland took the city to court in December, Judge Smith, without ruling on the issue, let it be known he was not pleased that the city had taken the extra capacity unilaterally.