A ground-hugging, low-key design concept for a U.S. Navy Memorial--to be built as part of the planned Market Square development along Pennsylvania Avenue between Seventh and Ninth streets NW--was approved yesterday by the Pennsylvania Avenue Development Commission.

The design, the fourth presented by the Navy Memorial Foundation in less than two years, probably will serve as the basis for construction, according to Thomas J. Regan Jr., executive director of the PADC.

Unlike previous plans, the latest design has been reviewed informally by staff members of the three other government agencies that must approve it, and it was "enthusiastically received," Regan said.

Under the 1977 federal legislation approving construction of an exclusively naval memorial, the design must be approved by the Commission of Fine Arts, the National Capital Planning Commission and the Department of the Interior, in addition to the PADC.

The design appproved yesterday is far different from the massive 10-story "Arc de Triomphe" originally proposed in February 1982, but it takes some themes from that and from subsequent proposals.

Throughout the design process, the memorial has been envisioned as a site for band performances. The arch in the original proposal was to have doubled as a band shell.

The centerpiece of the latest proposal is a circular plaza, on the floor of which would be enscribed a representation of the Western Hemisphere, Regan said. This would highlight the United States and illustrate its dependence on the seas, Regan said. The plaza would also serve as seating for band performances.

In the latest design, a slightly larger than life figure of a lone sailor would be placed at the northern edge of the plaza. In the second design proposal, this figure was to have been 30 feet high.

Two other large pieces of sculpture would also be included in the memorial, but there are no definitive plans for them, Regan said.

The third major element of the memorial would be a series of plaques--numbering perhaps 24 and probably no larger than 18 inches by 30 inches--that would depict the history of the U.S. Navy and the role the Navy has played in major events. The plaques probably would be incorporated into the walls of several pools and fountains that would enclose the central plaza, Regan said.