The family of a D.C. police officer who died after a head-on car-van collision with another D.C. employe will receive a settlement worth more than $4.5 million from the District and General Motors Corp.

The settlement, of which all but $85,000 will be paid by the District, requires an initial cash payment of $344,500 to the family of 33-year-old Jackie Gray and the purchase of an insurance annuity that will provide monthly payments to the family.

The total cost of the settlement for the District will be about $800,000, one of the largest agreements ever for the District, a city attorney said yesterday. The agreement, approved by Mayor Marion Barry Thursday, will be sent to D.C. Superior Court Judge Eugene Hamilton for final approval.

Gray, a 10-year member of the force, died of severe brain damage five days after his 1984 Pontiac was struck head-on by a District van as it crossed the Sousa Bridge on Nov. 30, 1985. Bobby Gene Lott, the driver of the van, told police that he was forced into Gray's lane by another car.

Robert Cadeaux, lawyer for the family, alleged in the suit that Lott caused the accident through reckless driving and accused the District of negligence in its failure to properly train Lott or investigate his driving history. Cadeaux said Lott's Virginia driving permit had been suspended and that he faced suspension of his District driver's license at the time of the accident.

The family was barred from suing Lott because he was working for the District when the collision occurred. General Motors was named in the suit because the family alleged that the hood of Gray's car hit the windshield during the accident.

Gray, who was a patrol officer in the 2nd District, had two children, now 5 and 8 years old.