Lt. Col. Joseph D. Vasco, deputy chief in charge of criminal investigation in the Prince George's County police department who lobbied unsuccessfully to become police chief, was granted medical disability retirement yesterday and will leave his post at the end of this week.

"It's all over," Vasco said. "I thought it all over and decided to go out and see if I couldn't find something as interesting and as challenging."

Vasco added that his action would give Maj. Michael J. Flaherty, who won nomination to the police chief's job, "a fresh start."

Flaherty was nominated to the post in mid-August by County Executive Parris Glendening. The County Council is scheduled to review the nomination today and if it confirms Flaherty, as expected, he will become chief on Saturday when the current chief, John E. McHale Jr., steps down.

Vasco, 48, applied for the retirement more than a week ago He said the county's Medical Review Board, composed of doctors, considered his case last week and a second retirement review committee of county officials gave him final approval yesterday.

Vasco said the speed with which his application was approved was not unusual because "the documentation is such that there was no doubt" that he qualified for a medical disability retirement. Early in 1980, he was critically injured when his police cruiser spun out of control as he was coming home from a police officer's funeral. He crashed on a rural road in Upper Marlboro and it took him three months to recover from injuries to the chest, including a severed bronchial tube. He said a review board decided at the time that he could retire because of his injuries.

The medical disability retirement will entitle him to 70 percent of his $50,000 annual salary. If medical disability had been denied he would have been entitled to only 56 percent.

Vasco, whose 20-year career has included stints as acting chief of police and acting director of the Department of Corrections, is widely respected by his fellow officers. Many hoped he would be named chief this year, and the Fraternal Order of Police voted to endorse his candidacy more than a year ago.

Several black community leaders objected to his appointment because of his role in a series of controversial stakeouts of stores in 1967. Vasco was accused of helping informants set up robberies at convenience stores, and police killed two holdup suspects in those robberies. Although several investigations over the years have cleared Vasco of any wrongdoing, County Executive Glendening said he believed that the controversy surrounding Vasco would impair his ability to lead the department.