Federal and Prince George's County officials signed an agreement this week that will permit demolition of the long-vacant Baber Village housing project for low-income families, probably within a month or two.

County Attorney Robert Ostrom said the Justice Department, acting on behalf of the U.S. Department of Housing and Urban Development, signed a consent decree Tuesday previously approved by county officials. The agreement is to drop a 1978 U.S. court injunction that has barred the county from demolishing the dilapidated 200-unit project.

The decree, which must be signed by the federal judge who issued the injunction before it goes into effect, is the centerpiece of a housing plan worked out between the county and HUD officials this year.

That plan, announced by County Executive Lawrence J. Hogan last January but not formally agreed upon by HUD until this month, will allow the county to sharply reduce the number and size of low-income housing projects in Prince George's -- an objective long sought by Hogan and his predecessors.

HUD previously had demanded that the county rehabilitate its low-income projects, including Baber. In 1978, when former County Executive Winfield M. Kelly Jr. ordered Baber bulldozed, HUD officials requested and received a federal court order prohibiting that action. It is this order that HUD officially asked the court to rescind this week.

HUD reversed its position on the county's housing projects, which Prince George's officials long have felt gave their jurisdicition a bad name and deterred more expensive development, after Prince George's agreed to provide subsidized housing scattered throughout the county in numbers equal to the numbers of units being torn down.

The county, as part of the consent decree signed this week, has agreed to ensure that any new development on the Baber site off Central Avenue contains 20 percent federally subsidized units. In addition, the county has agreed to apply for 300 "traveling" certificates from HUD that poor families can use toward the cost of an apartment anywhere in Prince George's.

In addition to dropping the federal court injunction, the housing plan agreed to by HUD and Prince George's will permit the county to demolish 155 units at the Gregory Estates project in Seat Pleasant and 105 units at Pumpkin Hill in south Laurel. The remaining units in those two projects will be rehabilitated, according to the housing plan.

Hogan was traveling in Europe yesterday and unavailable for comment. Acting County Executive Kenneth Duncan said that as soon as U.s. dIstrict Court Judge James Miller signs the consent decree the county will "expeditiously carry out the agreement. It's our intention after several years of battling over this thing to go in and tear down Baber Village."

Duncan said the county soon will begin to approach developers in an effort to have the Baber property redeveloped with a mixture of housing for low- moderate- and high-income families.