Western Development Corp., a Washington-based company that apparently has had trouble getting its $200 million Market Square office-residential complex off the ground, is trying to sell a large share of the project to the nation's biggest developer, Trammell Crow Co., real estate industry officials said.

The plan has drawn a protest from Lincoln Property Co., the nation's second-largest developer and a losing bidder in the federally sponsored competition to develop the valuable property on Pennsylvania Avenue between Seventh and Ninth streets NW.

A top official with Lincoln Property said his company might file suit to stop a transfer of interest in the project to Trammell Crow, which did not participate in the 1984 bidding. That could delay construction, said individuals involved in the controversy.

The battle is expected to be joined today at a meeting of the Pennsylvania Avenue Development Corp., the quasipublic agency established by Congress that selected Western to develop the tract. The agency is scheduled to consider Western's request for permission to sell a majority or minority ownership share of the project to the Dallas-based Trammell Crow, a bitter rival of Lincoln Property, which is also based in Dallas.

Real estate industry sources said Western is spread thin from trying to develop many sites at once and has sought a well-financed partner to develop Market Square. In 1985, the District government selected Western as the developer of the $600 million Portal site complex at the foot of the 14th Street bridge in Southwest Washington. That deal is under investigation by federal authorities probing District government contracting.

William S. Janes, Lincoln Property's Washington partner, said in a letter sent yesterday to Pennsylvania Avenue Development Corp. Chairman Henry A. Berliner Jr. that his company might file suit to stop Western's proposal to transfer "controlling interests" in the deal to Trammell Crow.

Janes wrote that a development agency decision in favor of Western's plan "would circumvent the competitive bidding process that {the agency} so carefully organized in 1984 and severely undermine public confidence" in the agency.

Lincoln is asking the agency to reopen the competition and choose a new developer or give the development rights to Lincoln, which was ranked second in its competition.

Officials at Trammell Crow's Washington office did not return telephone calls yesterday, and Western officials could not be reached for comment.

Pennsylvania Avenue Development Corp. officials have insisted that the developer build 225 residential units in the Market Square complex, which is across from the National Archives. Because residences are considered by some to be a risky investment in that area of federal buildings and offices, real estate insiders have said that the project is unattractive financially.

But Western officials repeatedly have said that they can complete the project alone, even as they declined to comment on rumors about potential investors. Some area developers have said that Western has been trying to sell a share of the project for a year.

Berliner of the development agency declined to comment yesterday on the specifics of Market Square, but he said that "the number one priority from our point of view is the completion of the project." He said that if a group that has been selected to develop a development agency site wants to change its partnership, the agency would want to know, "Are these {new} people going to continue the same quality of design?"

Berliner added that the federal agency did not want developers to think that they can "traffic" in agency development rights. Janes suggested in his letter that the transfer of the rights would violate federal law.

Berliner said that Western should not be allowed to dilute the ownership share of its minority partners. Last year, when the group paid the development agency $26 million for the site, the agency disclosed that Western officials owned 85 percent of the partnership and that minority partners owned 10 percent.