Montgomery and Prince George's counties declared a temporary truce in their sewer war yesterday, permitting the bicounty utility agency to approve long-delayed construction projects totaling $78 million.

Approval of the projects means that developers can proceed with plans to build 4,000 houses in two counties. Without water and sewer lines -- which were tied up by a dispute over funding for the Washington Suburban Sanitary Commission -- the projects could not go forward.

But Montgomery paid a price for the truce. In voting with Prince George's to approve the WSSC's new construction plans, it stopped insisting that four pet projects be included. One of the Montgomery-favored projects not included was construction of a sewage-sludge composting facility near Calverton in the Rte. 29 industrial corridor.

Sally Kanchuger, one of Montgomery's three commissioners on the sewer agency, said the composting facility can be reinstated by the County Council. But she said the other three projects -- all giving Montgomery access to Prince George's ample treatment plants -- are now probably dead.

"It was a retreat," said Kanchuger. "No question about it."

Montgomery wants to build the composting plant to convert its share of stewage sludge from the regional Blue Plains treatments plant -- about 300 tons daily -- to soil conditioner. Without the plant, the county has been forced, like other Blue Plains users, to dump the sludge in trenches. But land is running out.

Prince George's has opposed the composting plant, complaining it is situated too close to its residents just across the county line.

The WSSC, which finances and operates all water and sewer projects in the two counties, was supposed to have approved its construction budget last Oct. 1. But because of the persistent feuding between the two counties, the six commissioners -- three from each county -- could agree only on about 61 percent of the spending plan. The rest -- worth $78.6 million -- was left dangling.

The Suburban Maryland Homebuilders Association, threatening legal action last January, said, "They (the WSSC commissioners) have failed to meet their statutory requirements and are handling the situation irresponsibly." But the threat to new development was lifted by this week's budget agreement. "The commissioners' action would definitely clear that stumbling block," a WSSC spokesman said yesterday.

Among the projects that faced delays because of the WSSC funding impasse were Golf America Corporation's 700-house development south of Rte. 50 near New Carrollton in Prince George's, NUS Corporation's plan to build a campus-style office complex on I-270 in Montgomery, and Prudential Insurance's plan to build 362 town houses and 130 duplexes near Germantown.