D.C. officials expressed anger yesterday over the cancellation of construction plans for the Metro subway's Green Line through Southeast Washington, charging that the needs of residents in the city's most densely populated area are being sacrificed to business interests in Prince George's County.

"We have been used as pawns in the process, and it infuriates me," said Thomas Downs, head of the city's transportation department.

"You were one of the prime justifications used before Congress to get this system built," Downs told a small group of residents gathered at Terrell Elementary School. "You're owed this system. Demand it."

Downs was joined at the meeting by city administrator Elijah Rogers and City Council members Wilhelmina Rolark (D-Ward 8) and Jerry A. Moore Jr. (R-At Large). All urged area residents to moblize for future public hearings on the routing of the line, expected later this year.

Metro officials this week were barred from spending any funds on the southern portion of the Green Line, which was to run from the Navy Yard through Anacostia to Rosecroft in Prince George's County. A U.S. District Court judge in Baltimore blocked the system from making any expenditures that would deviate from 1968 plans placing the line several miles to the north.

That ruling came as a result of a suit brought by Prince George's businessmen who contend the line should be built as originally proposed.

The court said that public hearings held five years ago to consider changing the route to its current proposed location were not properly advertised.

Metro now must hold new public hearings on the route. Metro officials have said they may consider shifting funds from Anacostia to the northern portion of the Green Line.

Speaking to a group of residents in Congress Heights, where a station was to be built near Alabama Avenue and 13th Street SE, Downs said the court order will delay construction for at least a year and probably longer. In light of Reagan administration plans to cut construction funding for the system, he said, the future of the entire line is in jeopardy.

"I don't know how to tell you how long this process might take," Downs said.

Metro officials had planned to begin $120 million worth of construction on the Southeast line. They had intended to advertise later this month for a $60 million contract to tunnel under the Anacostia River and had expected later in the year to look for a contractor to build the$60 million Anacostia station.

Metro had agreed to spend a third of its construction funds over the next three years on the line.

Moore, who also is chairman of the Washington Metropolitan Area Transit Authority, told about 50 persons attending the meeting that he will propose this week that the hearings be scheduled for June. Moore and Rolark also said that they will introduce legislation in the City Council urging Metro to hold onto funds already earmarked for the Anacostia line.

"I think Metro is going to respond to the tremendous amount of need we have here," Rogers told the group. "But there's a lot of money at stake."

The Reagan administration proposes cutting 1983 Metro construction funds from $375 million to $295 million. More than $150 million of that had been earmarked for the Green Line.