A settlement was reached yesterday in a dispute that has stopped production at manufacturing facilities at the Lorton Reformatory, and the 500 or more inmates who work in the shops involved are expected to be back at work today, D.C. Corrections department officials said.

Dan Strickland, superintendent of industrial services at the reformatory in Fairfax County, said corrections officials and inmate representatives signed an agreement that responds to grievances voiced by inmates at the outset of the nine-day strike.

One of the principal grievances involved delays in inmates' access to the money they earned. Access, through the processing of money orders and issuance of coupons--redeemable for items at the reformatory canteen--will be speeded up, Strickland said.

He also said that discussions will be held to find ways to raise wages for low-paid inmates who have no opportunity for promotion.

He said officials expected to develop a plan for pay increases at some job levels based on longevity.

In addition, Strickland said, a provisional agreement was reached stipulating that the traditional 10 per cent yearly salary increase, suspended this year because of lack of funds, would be reinstituted when funds are available.

At the outset of the strike, corrections spokesman Leroy Anderson described the basic problem as "too many inmates and too few people to attend to their needs." He said the striking prisoners would not be punished.