A three-judge panel of the D.C. Court of Appeals yesterday upheld a lower court decision that the D.C. Board of Elections and Ethics had acted properly in deciding not to hold a citywide referendum on the building of a downtown convention center.

The court rules that since Congress already had appropriated funds for the controversial $100 million convention center, a referendum on the issue would violate the principle of the separation of powers, which gives the mayor exclusive authority to spend funds already authorized.

The convention center, scheduled for completion on two years, is being built on a three-block area near Mount Vernon Square. The final $27 million to be appropriated by Congress for the project is expected to be approved soon.

Chief Judge Theodore R. Newman Jr. wrote the majority opinion for himself and associate Judge William C. Pryor. In a strongly worded dissent, however, Associate Judge George R. Gallagher said the issue was not separation of powers but the "chacter-given right to vote," toward which he accused the District government of taking a "begrudging attitude."

The organizers of the group opposing the convention center said they will ask for a rehearing by the entire court on the issue.

They said they based their decision to appeal the case on Gallagher's dissent, which said, "No decision of this court potentially has more far-reaching implications than this one," and if let stand, would confuse the District's voters.

Under the city's charter, citizens can propose laws through initiatives, which means placing the question on the ballot if a sufficient number of voters sign petitions.

The convention Center Referendum Committee collected more than 15,000 signatures on a petition in 1978. Its adherents wanted a public vote in order to block the convention center project, fearing that the center would be a money loser and a burden on taxpayers.

After being turned down twice by the elections board on requests for a referendum, the committee took the matter to court. D.C. Superior Court Judge Fred B. Ugast ruled against the group, saying that only in certain circumstances -- on projects for which Congress had not yet appropriated funds -- could referendums be called.

Once the money has been provided, Ugast said, it is too late. Chief Judge Newman's opinion affirmed Ugast's decision.

William Schultz, lawyer for the protesting group, said "the mayor decided the construction of this was to important that he was willing to give away home rule to get it."

According to city officials, construction on the downtown convention center, which began last March, is on schedule for the August 1982 target completion date.

Court officials said yesterday the convention referendum group has two weeks to ask the entire nine-member court to hear its case.