The D.C. Court of Appeals yesterday lifted its 10-day-old order that had barred a developer from obtaining city building permits for a $154-million residential and commercial project along the Georgetown waterfront.

Officials of the Western Development Co., the developer, and city officials said the building permits will probably be issued next week. Western's president, Herbert S. Miller, said construction would begin immediately thereafter.

The court's decision all but ends the two-year-old battle between Western, which plans to build four new buildings containing condominiums, offices and shops, and the Citizens Association of Georgetown, which wants the disputed six-acre tract along the Potomac River turned into a park.

The citizen group last month carried its fight to stop the development to the D.C. Court of Appeals after the city's historic preservation officer, Carol B. Thompson, approved the development. On Nov. 3, the court issued a temporary order to stop the issuance of the building permits, but yesterday that ban was lifted. The judges must still rule on whether to uphold or overturn Thompson's decision.

Frank Murphy, an attorney for Western, said that since the court was letting the construction proceed, "we take it to mean that they the citizens would probably not be successful" in persuading the judges to overturn Thompson's order.

Douglas Dworkin, an attorney for the citizens association, disagreed and downplayed the importance of yesterday's order. "It is one decision on one preliminary matter," he said.

The citizens have another ally, Sen. Mark O. Hatfield (R-Ore.), a Georgetown resident. Last Tuesday, the Senate Energy Committee approved Hatfield's bill that would allow Secretary of Interior James G. Watt to acquire the six-acre waterfront tract and give Western some other federal land of "equal value." The bill now goes to the full Senate.