AFTER threatening to stop the project because it was becoming too expensive too fast, the federal government has cleared the way for a scaled-down but still huge federal office building and international trade pavilion on what is now an 11-acre eyesore of a parking lot next to the District Building on the Federal Triangle. The General Services Administration, which had found a number of understandable reasons for rejecting the earlier version, is satisfied now that a good $82 million in architectural and other costs have been lopped from the project. If all goes as promised now -- and the revised projections hold -- private developer William Zeckendorf will build the complex and lease it to the government for 35 years -- at which time the government will own it.

The revisions make important differences in the financial impact on the Federal Building Fund, which is the GSA fund used to acquire space for federal tenants. GSA had been concerned that the project might not meet a requirement in a 1987 authorization that the international trade center make enough money to cover its share of the rent by its third year of operation. GSA concluded then that the pavilion -- shops, theaters, exhibit halls, reception space and foreign missions intended to be self-sufficient -- would lose $18 million to $24 million a year. But the agency says the revisions should meet this requirement and that estimated rents for the federal office space can be reduced and still provide enough money to amortize the debt.

As GSA Administrator Richard G. Austin noted in approving the deal, the projections for the center "are all very speculative," but the margin of error is considered acceptable. Officials note that under the revised plan, the international center can more easily be converted to government offices if it does not succeed.

It will be up to the independent commission that will run the trade center to make good on its commercial plans. If the pavilion does draw as envisioned, it could be an attractive, useful final link in the improvements along Pennsylvania Avenue that have been talked about and slowly put into place ever since the 1960s. The reduction of risks and economies of consolidating federal agencies into a building that will be turned over to the federal government make the revised project both more appealing and more realistic than it looked earlier this year -- and given what the site looks like now, the Grand Avenue could stand the new look quite well.