Charles J. Cedeno, the former Fairfax County purchasing director who claimed he was fired for "daring to expose" irregularities in the county's $50-million-a-year purchasing agency, announced yesterday that he has settled his $1 million lawsuit against the county.

In return, the county agreed to drop the dismissal notice it gave him last summer and allow him to resign from the county government. When he was fired, county officials rejected his allegations and accused him of creating "an atmosphere of fear and disgust" in his agency by using extensive "vulgarity and profanity."

As part of the settlement, Fairfax officials also agreed to pick up an estimated $8,500 in legal bills that Cedeno accumulated in bringing the suit in U.S. District Court in Alexandria.

Cedeno's announcement of the agreement, released through attorney John Grad, is expected to mark the end of the bitter squabble between Cedeno and the county that erupted late last spring when Cedeno publicly charged that cost overruns and improprieties in bidding procedures were costing the county millions of dollars a year.

County officials, bristling at suggestions that Fairfax's reputation for clean government is undeserved, fired Cedeno a few weeks later and called his charges a smokescreen to shield him from complaints by female workers that he had subjected them to sexual harassment.

"Certain statements about my personal habits, I strongly reject," Cedeno said yesterday in a news release that had been cleared by the county, "but I believe that some of these statements, like several strong statements that I made, were made in the heat of the moment. The county officials and I are all willing to put these matters behind us, and this is one of the reasons that I instructed my attorneys to drop this lawsuit."

County officials, as well as attorneys representing Cedeno and the county, refused further comment on the settlement, and several said the silence was part of the agreement.

According to those sources, county officials agreed to settle the case after Cedeno promised to apologize for his earlier charges. In his statement yesterday Cedeno said: "I have never had the intention of impugning the integrity of the county government, or any of the county's officials, and this has been my position from the start."

An audit of the county's purchashing department by Peat, Marwick, Mitchell and Co. subsequently appeared to corroborate some of Cedeno's allegations, and criticized county purchasing rules as overly vague. Larry Wellman, who succeeded Cedeno as the county's purchasing director last month, said yesterday the audit prompted the county to tighten many of its purchasing procedures.

Cedeno, a native of Venezuela, said he has accepted a position as executive vice president of the American Transit Purchasing Association, a Chicago-based firm that he said buys mass transit equipment for clients in South and Central American and elsewhere.