Two unlikely partners have resolved a dispute that has plagued the private company hoping to extend the Dulles Toll Road from the international airport to Leesburg.

John R. Reilly, the former president of the for-profit Toll Road Corp. of Virginia, has agreed to settle an $848,000 breach-of-contract lawsuit filed after his dismissal from the company. In addition, he has withdrawn a protest to the State Corporation Commission alleging that the toll road firm's chief executive officer, Ralph L. Stanley, mismanaged the company.

The commission is considering final state government approval for the project.

It is believed that Reilly will be paid about $100,000 in the deal, which removes one of several obstacles faced by the toll road company. It aspires to be the first firm authorized to build a profit-making toll road in the state since 1816, having already gained approval from Virginia transportation officials.

Reilly and Stanley teamed up in late 1988 to form and operate the company, but their association quickly turned sour.

Reilly, a veteran Democratic political operative, was considered former vice president Walter Mondale's closest personal adviser during the 1984 presidential race.

Stanley, an urbane Republican, is an apostle of privatization and was chief of the Urban Mass Transportation Administration under President Reagan.

Those familiar with the situation say it wasn't political differences that led to fireworks at the budding firm; it was that both wanted to be in charge of the Toll Road Corp. Reilly and Stanley said they have agreed not to publicly discuss the case or the amount of the settlement.

Although the settlement eliminates one roadblock for the toll road firm, the company still must persuade the Corporation Commission that its financing plans are sound and still must complete acquisition of the 15-mile right of way. That task is made more difficult by the fact that, unlike a government, the Toll Road Corp. cannot automatically condemn property.

Some corporate landholders along the route have donated the necessary property and are helping acquire additional right of way, but Stanley's firm eventually may purchase some land directly.

In addition, the Metropolitan Washington Airports Authority said it won't let the toll road extension pass through its Dulles property until Virginia officials commit a major share of the profits from the current toll road, which links Tysons Corner and the airport, to a major express bus service and an eventual rail system in that corridor.

Officials involved in negotiations for such a pact reported progress last week, suggesting that Virginia's Commonwealth Transportation Board may be asked to approve a deal in July.

Stanley and others in the toll road firm have played down the Reilly case as a factor in the fate of their proposal. Yet they were clearly concerned when the commission scheduled a June 27 public hearing to hear Reilly and state transportation officials, and obviously relieved when Reilly withdrew his petition.

Reilly, 62, came to Washington in the early 1960s to work for Robert F. Kennedy at the Justice Department. He moved to the Federal Trade Commission and subsequently did antitrust work here for a Chicago-based law firm, Winston & Strawn, while keeping his hand in national politics. Reilly developed a reputation as the man who could get away with being candid with Mondale during the 1984 presidential contest.

Stanley, 38, trained as a lawyer and investment banker, toiled in Gerald R. Ford's presidential campaign in 1976 and wrote some speeches for Ronald Reagan in 1980 before taking the UMTA post.

Reilly and Stanley, both strong-willed, wound up at the New York-based Municipal Development Corp., Reilly as a director and Stanley as senior vice president. Stanley decided to leave and pursue the private toll road project in Virginia. He recruited Reilly as a top aide because he needed someone with excellent Washington connections to help start the company, according to those familiar with the history.

"It didn't work out," Stanley said last year after Reilly filed his suit. On that, Reilly and Stanley agreed.