The Alexandria City Council approved a $150 million development near the Landmark Shopping Center last night despite the complaints of more than 100 of its neighbors, who said at a public hearing that the project would cause massive erosion and traffic jams.

The development, to include two 12-story office buildings, a 16-story hotel and an underground seven-level garage, had already been approved by the city's planning commission and was before the council on appeal.

After listening to complaints, Walter Neale, president of the Landmark Center Development Corp., the developer, agreed to several of the speakers' demands.

Neale said his company will hire two engineers to monitor construction of the underground garage because officials have said that it could cause the collapse of part of Van Dorn Street.

Part of the 10-acre project will be built on the steep hill between Van Dorn and Ripley streets. Dayton Cook, director of the city's transportation and environmental services, warned the council of the hazards of building on the steep incline, particulary because Van Dorn Street is heavily traveled.

Neale agreed to provide 100 parking spaces for nearby residents, to keep a barrier of trees between existing condominiums and the new project, and to pay for a traffic signal near the Place One condominum if the city says it is needed.

The developer previously agreed to purchase a bus for the city's DASH transit system and purchase $10,000 worth of bus tickets for each of the next 10 years for residents and employes of the complex after residents complained of traffic congestion.

"Please stop this insane development in the West End," said Donna Fossum, president of the Holmes Run Committee. "Give us some reasonable living."

The project, expected to take five years to complete, will begin next spring, Neale said. Once completed, it will be the densest development in the city, Mayor James P. Moran said.

Moran, who said he was unhappy with the amount of wooded land the complex will eliminate, voted with the other six council members to draft a master plan for the West End to ensure that another massive development will not be approved. Council members said they will discuss altering the zoning code requirements that allow three square feet of commercial or retail space for every square foot on a building lot.

In action on another controversial issue, the council reversed a position it took last month and voted 5 to 2 to ban skateboarding, bicycling and the playing of loud radios in Market Square outside City Hall.

Acting City Manager Vola Lawson said more than 20 people had complained to the city in the last month that teen-agers were disturbing people eating lunch or relaxing in the square.

"The situation is getting intolerable," Moran said in voting for the ban. He noted that the city has spent $4,500 to clean graffiti from the square's stonework.