The D.C. Court of Appeals yesterday upheld the city's approval of a $154 million residential and commercial project along the Georgetown waterfront, apparently ending a bitter three-year battle over the prime six-acre tract.

A lawyer for Western Development Co., the developer, said his client was pleased with the court's decision, adding that work on the site had been under way since last November, when the appeals court lifted a temporary ban on the city's action.

The Citizens Association of Georgetown, which had led the opposition to the plans for the four-building complex on the site, wanted the area turned into a park.

When the District's historic preservation officer, Carol B. Thompson, approved the development last October, the citizen group asked the appeals court to overturn Thompson's ruling, saying that Thompson had not followed proper procedures in reaching her decision.

In an opinion for the unanimous three-judge panel, Judge Julia Cooper Mack said that Thompson acted improperly in a highly publicized visit to the site without representatives of both sides there, but Mack said that a second visit and a subsequent hearing over the matter "cured this defect" in the procedures.

Sources close to the citizen's group said that it was unlikely that yesterday's decision would be appealed to the full D.C. Court of Appeals.