Last year Arlington Board member John G. Milliken was at a crossroads.

One of Northern Virginia's most prominent Democrats, he had lost a grueling race to unseat Republican Rep. Frank R. Wolf in Virginia's 10th Congressional District, barely carrying his own home base of Arlington.

As he said he does at regular intervals, he took stock of his life, weighing at one point whether to leave his law practice at Winston & Strawn in the District to become a businessman. One thing he never considered, he said yesterday, was leaving politics.

The Democratic majority of the Arlington County Board announced yesterday that Milliken, 42, will succeed Albert C. Eisenberg as chairman next year. Also, Milliken said he is considering another campaign for Congress.

"It's on my mind," he said yesterday. " . . . I'm talking to a lot of people about it."

Milliken's selection to the year-long post was announced at a news conference yesterday at the Arlington Court House. Board member Ellen M. Bozman will be vice chairman, it was announced.

Although the board chairmanship holds no extra power, it has one big asset: visibility. For this reason the majority party has traditionally awarded the job to whichever of its members faces reelection that year.

Milliken's term on the county board expires next year. He was first elected to the board in 1980. Milliken would have to choose between running for Congress or for a third term on the board.

Wolf beat him decisively last time, 60 percent to 40 percent. But many think that former Democratic governor Charles S. Robb, who is regarded as a favorite for the Senate seat being vacated by Sen. Paul S. Trible Jr., will bring other Democratic candidates into office on his coattails.

Milliken is quick to say that local government still fascinates him. "You are constantly faced with new problems and new sets of people, and when you work on them you can actually see the consequences of what you do," he said.

Local Republicans are watching Milliken's deliberations with interest.

Scott McGeary, Arlington Republican chairman, said the board chairman's post, though a prominent one, is time-consuming and might leave little time for a congressional race.

McGeary said he had no doubts that Wolf would run strongly in Arlington, which had been considered Milliken's stronghold. Wolf came within less than a hundred votes of carrying the county last year, said McGeary.

In the meantime, Milliken is preparing his agenda for next year's county business. He declined to give any specific initiatives he will propose, saying his intention was to announce them at the board's annual New Year's Day organizing meeting.

As chairman in 1985, Milliken steered the board away from debates on land use and development policy, saying those issues had been settled, and emphasized "livability" and improving the quality of life in the county.

Noting the county's fiscal soundness and reputation for good services, he said he would have "the good fortune of being able concentrate on positive things," rather than having to cope with problems such as deficits.

However certain issues are sure to head the board's list of priorities next year.

One is affordable housing.

The county made strides in this area this year, said outgoing board Chairman Eisenberg.

He cited the Lee Gardens agreement in which a part of that apartment complex will be owned by a nonprofit housing group and some of its units set aside for poor tenants. Eisenberg also mentioned the county's housing fund, for which the board set aside 2 percent of the county's revenue and to which several developers have recently made large contributions.

In reviewing this year Eisenberg said the county stuck to its established land-use plans in considering development proposals.

Construction began this year on many of the projects that were proposed years ago, said board member Ellen M. Bozman, alluding to construction along the Rosslyn-Ballston Metro corridor.