THE $4-BILLION local public works bill has been snarled by the renewal of a row between the House and Senate over water pollution policies. At issue are several points on which the two houses deadlocked last year. For instance, the House Public Works Committee wants to cut back federal authority over dredging and filling of wetlands. Sen. Edmund S. Muskie (D-Maine) and others have resisted this because they fear, with reason, that relaxing the controls could cause valuable marshes to be destroyed or waterways polluted by the dumping of toxic wastes.

The two houses also disagree about how much leeway to grant to industries and local governments that cannot meet the mid-summer clean-up deadlines in existing law. The House panel wants to give industries until 1979 and municipalities until 1982 to install more adequate pollution control systems. The Senate recognizes that some flexibility will be required, especially where local waste treatment projects have been held by federal funding delays, but prefers shorter case-by-case extensions to keep the clean-up pressures on.

Last year's impasse on these and other points blocked one step everyone supports, an extension of the multi-billion-dollar grant program for sewage treatment facilities. This month, Sen. Muskie tried an end run by attaching a $9-billion grant authorization to the Senate version of the local public works bill. The House panel, predictably, does not want to untie the aid from the more controversial questions and has refused to go to conference. Since Sen. Muskie has declined to retreat, the House panel has now trotted out a new version of its old bill and will shortly ask the full House to send that to the public works conference, too.

Both sides ought to back off. The public works bill needs to be wrapped up rapidly, because every delay will push more of the actual spending into next year, when such an economic stimulus could be ill-timed. The wetlands, on the other hand, can wait a little while. The need to extend the water pollution grant program should be enough incentive for both houses to consider the clean water issues on their own merits later this spring. Right now, the two committees should agree to a truce.