The Army Corps of Engineers, abandoning its advocacy of building big dams along the Potomac River system, has concluded the Washington metropolitan area can meet its water needs for the next 50 years by stressing conservation and using present reservoirs more efficiently.

The corps' switch, two years after the collapse of its latest dam proposal, will come in a 10-volume study schedule to be released to local governments later this week.

Only one relatively small and inexpensive reservoir -- on Seneca Creek in upper Montgomery County -- needs to be built between now and 2030, the Corps concludes in the study.

The Corps' support for big dam projects along the Potomac has kept it enmeshed in almost constant controversy with environmentalists and other interest groups in Marylamd, Virginia, and West Virginia. Dam opponents have argued that Corps proposals would despoil the river system and provide the unheeded impetus for further growth of the Washington area.

Since the Army study was commissioned by Congress, local officials say it is likely to be a crucial factor in shaping water policies for area governments. The corps cannot order any plan implemented, but it can, through its power to regulate construction on the river, have a powerful impact on the region's water supplies.

If all the local jurisdictions agree to solve their water-supply problems by working together, the added costs for meeting the region's needs could be held to $116.7 million over the next 50 years, the report says.

While local water utilities have been loath to give any of their powers to regional compacts, officials of the agencies yesterday hailed the corps' study.

"It's a good product (the corps' report)," said James J. Corbalis Jr., director of the Fairfax County Water Authority, which supplies more than 600,000 people in Alexandria, and Fairfax and Prince William counties.

"I hope this is the way we can go," said John M. Brusnigham, assistant general manager of the Washington Suburban Sanitary Commission, which serves 1,205,000 people in Montgomery and Prince George's counties.

For the corps, a water-supply philosophy that emphasizes conservation downplays dam building represents a significant shift in policy.

"It is new, it's a different policy," said James E. Crews, chief of the urban studies branch of the corps' Baltimore district, which did the study. "It's consistent with the conservation ethic. It's the president's policy."

As recently as 1977, the corps was urging construction of a $100 million dam on the North Fork of the Shenandoah River in Augusta County, Va., to serve the Washington area. The plan encountered heavy opposition and like other corps dam proposals, the Shenandoah project was abandoned.

The corps' scaled-down proposals for Washington were inspired in large part by local pressures. Both Montgomery and Prince George's counties, for example, have adopted water-planning policies that count on conservation and creation of the Seneca reservoir.

The corps' new philosophy applies nationwide, according to Crews. He says that the agency is developing a program under which localities will not be able to buy water from flood-control reservoirs unless they have drawn up conservation plans. The policy is aimed at discouraging construction of unnecessarily large reservoirs -- a practice that long has been attacked by the corps' anti-dam critics.

By planning for a less severe drought than considered in prior studies, and by counting on a reduction in water usage through conservation, the Corps has estimated that the two Patuxent River reservoirs and the Fairfax authority's Occoquan Reservoirs -- together with withdrawals from the Potomac -- will be able to meet most needs. In rare emergencies, the new Little Seneca Lake, whose primary purpose would be flood control and recreation, could be tapped for up to 120 million gallons a day, the Corps said.