A proposed office project for 20,000 Navy workers in Northern Virginia appeared to be in jeopardy yesterday after a Senate committee refused to allocate any funds next year for the $821 million project.

The move by the Senate Appropriations Committee on Wednesday was the latest in a series of setbacks for the project, which has been criticized by local governments and members of Congress who have questioned the need for a massive Navy complex at a time of declining defense spending and rising federal deficit.

Last week, Navy officials acknowledged that their original proposal for at least 3 million square feet of office space might have been too large, and told five developers bidding on the project that it could be reduced to a less expensive venture with as little as 2 million square feet.

The House has approved a bill authorizing $679.6 million for the Navy project next year, but the project has encountered a rockier road in the Senate. Several senators have said they aren't convinced that it is needed at this time.

Some, such as Sen. Daniel Patrick Moynihan (D-N.Y.), have questioned the Bush administration's attempt to pay for the project immediately, rather than stretch the payments over 20 or 30 years. Moynihan, chairman of the authorizing subcommittee that examined the Navy proposal, has been a key opponent.

The Appropriations Committee's spending plan for federal buildings -- minus the Navy project -- now goes to the full Senate. Congressional sources said yesterday that even if the Senate decides to allocate funds for the Navy proposal, it is unlikely to match the amount authorized by the House.

The issue is likely to be settled this fall by a House-Senate conference committee.

"There are some major differences over this project," one congressional aide said. "It's gotten to the point that I don't think anyone would be at all surprised if this whole thing were delayed a year or so."

Officials of the Navy and the General Services Administration, which is overseeing the project for the Navy, declined to comment yesterday.

Six sites have been proposed for the project, three in Alexandria and three in Arlington, where 16,000 Navy employees now work in leased office space in Crystal City. Those workers would be among those moved into a new Navy complex.

Arlington officials yesterday stepped up their criticism of the project, calling on Senate leaders to reject any funding for it.

In a letter to Senate leaders, Arlington County Board Chairman Albert C. Eisenberg echoed sentiments expressed earlier by Alexandria officials, saying that the government's plan to own the Navy facility -- rather than lease it -- would place an unfair burden on local taxpayers. Federally owned land is tax-exempt.

"It is estimated that the revenue loss to Arlington would amount to $6 million per year," Eisenberg said in the letter. " . . . Arlington is not prepared to accept the long-term impact of this revenue loss. Such a loss would far outweigh any benefits which currently, or in the future, would accrue to Arlington from the {Navy's} presence."

Rep. Frank R. Wolf (R-Va.), who supported the Navy project in the House, will meet with Arlington officials over concerns about federal ownership, a spokesman for Wolf said yesterday.

Sen. John W. Warner (R-Va.) also has supported the Navy project, but both he and Wolf have agreed that the Navy's original proposal, conceived during the mid-1980s defense buildup, should be reduced.