The federal Fine Arts Commission yesterday approved the basic, scaled-down design for a controversial residential and commerical complex on the tawdry Georgtown waterfront.

The $60-million development would replace the cement plant, trash and parking lots that dominate the shoreline with 350 luxury town houses and condominiums costing up to $500,000, chic shops, offices and a park adjacent to the complex.

The project's developers, Western Development Corp. and Chessie Resources, still must submit final architectural drawings to the commission, as well as contracts proving that the National Park Service plans to go ahead with development of a shoreline park between Key Bridge and Wisconsin Avenue.

The commission gave the basic design its stamp of approval despite its preference for nothing but a park on the waterfront -- the same choice as many Georgetown residents. Although Sen. Mark O. Hatfield (R-Ore.) has introduced legistlation to buy the land for a park, no committee vote has been scheduled on the proposal and the Interior Department opposes the all-park plan, saying it would be too costly.

As the development plan stands, 3.43 acres would be developed and slightly more than 15 acres turned into a park, with a portion of the park paid for by the developers and most of it by federal taxpayers, through the National Park Service.

Herbert S. Miller, Western Development's president, said that work on the final drawings and more commission hearngs could delay construction for at least another year. But he said the developers already have a loan commitment from the Chase Manhattan Bank for the "initial stages" of the project, an important consideration as interest rates on loans continue to rise to new, all-time highs.

The basic design approved by the commission calls for construction of an elliptical yacht basin, surrounded by curving buildings facing the Potomac. aLarger office and residential buildings abutting the Whitehurst Freeway would be built at the rear of the project and other shops and residences to the east along Rock Creek.

The commission last month had told the project's designer, architect Arthur Cotton Moore, that the rear buildings were too tall and bulky. Moore then went back to the drawing board and reduced the height of the reaer buildings from 88 feet above the Potomac to 68 1/2 feet and scaled down their size as well. Although some of the lost space was added to the buildings near Rock Creek, Moore said the overall size of the project was reduced from 750,000 square feet to 700,000, with 60 percent of the space residential.

Even with the reduction in height, the planned 68 1/2-foot structures would be the tallest ever approved for the Georgetown waterfront. The previous lid was 63.8 feet.

Commission chairman J. Carter Brown, the director of the National Gallery of Art, said the "heights here should not be used as any future benchmark" for other developers. But that didn't begin to placate citizen critics of the development.

"I was hoping they would reduce the height," said Grosvenor Chapman, a retired architect and former president of the Georgetown Citizens Association.

During a two-hour hearing on the proposal, developer Miller sought to assure the commission that he is committed to seeing that a park is built alongside the development, promising to work with the Park Service to get the park built. "We want it cleaned up as much as your do," Miller said at one point.

The developers even brought three Georgetown residents to testify that they approve of the planned development.

"I've been watching the plan," said Toni Peabody, the wife of former Massachusetts governor Endicott Peabody." This is absolutely marvelous. It will be so nice to look down Thomas Jefferson Street and not see the cement plant."

But various persons affiliated with the Georgetown Citizens Association left no doubt about their feelings.

Chapman descrbied the yacht basin as "about the size of the Oval Office. The reverberations of a power boat coming in there would be about like a Russian tank coming into Kabul."

Ann Satterthwaite, an environmental planner, said the project "really turns its back on the city," with the best views of it from Rosslyn and Theodore Roosevelt Island. She said spreading out of the project toward Rock Creek was like "putting a tighter corset on a fat woman."

Despite the commission's unanimous ruling, Chapman and the others were undaunted after the meeting.

"I wouldn't bury the [total] park yet," Chapman said.