The federal government has agreed to pay $680,000 in damages to a 54-year-old Washington man who suffered irreversible brain damage from loss of oxygen while he was on a respirator at the Veterans Administration Hospital here.

Daniel Lindsay, who was initially brought to the hospital for treatment of a blood infection, has been in a coma since April 25, 1979, when the hospital staff discovered that he had been deprived of oxygen for about six to eight minutes, according to one of Lindsay's attorneys.

The attorney, Elise Haldane said that the loss of oxygen apparently occured after a respirator tube became blocked with mucus.

The case was settled through negotiation between the VA and Lindsay's attorneys, and never went to court.

Haldane said in a telephone interview that an alarm on the respirator that is designed to sound when the machine's oxygen feed stops did not do so in this case.

Haldane said there is now "no hope" that Lindsay ever will recover from the severe brain injury he suffered as a result of that cutoff of oxygen. Ironically, Lindsay is otherwise in "very good health," Haldane said.

"He's just there. There is no response whatsoever. He's just there, like a vegetable," said Lindsay's youngest daughter, Juliette Davis, 29.

According to the settlement with the Veterans Administration, a $400,000 trust fund has been set up with a bank here to pay the cost of around-the-clock nursing care for Lindsay for the rest of his life. He also was awarded $100,000 more in damages.

His wife, Wilma, a retired preschool teacher, will receive another $100,000 for the losss of her husband's companionship. Under provisions of federal law, the settlement also includes $80,000 in attorneys' fees, for a total of $680,000.

Mrs. Lindsay, who said that she is "satisfied" with the settlement, said she expects that her husband will soon be transferred from the VA hospital to a nursing home in Columbia, Md. She said her husband had worked as a cook at Walter Reed Army Hospital until he retired on disability in the early 1960s.

Although Lindsay's left leg had been amputated sometime following his retirement, Juliette Davis said her father "still got around (and) went places with his friends."

Davis said that hospital staff members told her family the night before the respirator accident that her father's condition concerning the blood infection had improved. Davis said that the family had spent hours at Lindsay's bedside in the intensive care unit until they were assured on the night of April 24, 1979, that "he had started to get better." Lindsay had been in the hospital a week.

But the next day, Lindsay's wife, Wilma, said, she was told by a hospital spokesman that a problem had developed with the respirator.

According to attorney Haldane, the problem with the respirator was discovered about 3 a.m. Hospital staff tried at least twice to resume the flow of oxygen to Lindsay through use of a manual air pump, Haldane said. They then removed from his throat a tube that had been inserted as a conduit for oxygen and found that it was filled with mucus and apparently blocked, Haldane said.

Haldane and attorneys Robert Liotta and Nathan Finkelstein represented Lindsay.

A VA lawyer said privacy law barred him from commenting on the case.