The National Capital Park Service will allow the dumping of sewage sludge on a 17-acre tract it owns in far Southwest Washington, helping relieve a critical shortage of dumping places in the area.

The federal agency's permission to dump at Oxon Cove was given formally in a letter presented yesterday to Mayor Walter E. Washington during a morning meeting of federal and local officials at the offices of the Council of Governments.

Under the terms of the multi-party agreement that has taken a year of frequently ractious negotiations to consummate, the land, which is near the regional Blue Plains sewage treatment plant, will be used as a compost site for five years, then be redeveloped as a golf course.

Prince George's County Executive Winfield M. Kelley sought and received assurances that the golf course will be developed as much as possible during the five years the land is being used as a compost site. The golf course had been long ago promised to residents of Forest Heights, Md., which abuts the site.

"We had anticipated the need for some very heavy negotiating sessions," said one county official who asked to remain unnamed, "but everybody came ready to agree. It was a pleasant surprise."

One of the most important benefits of the agreement, various county and city officials said, is the savings it means for the purisdictions. Officials said composting would result in up to a 50 per cent savings cost of sludge disposal.

Currently, the sludge, the semi-solid residue of the sewage treatment process, is taken from the Blue Plains plant and dumped at Montgomery County's 714-acre site off New Hampshire Avenue in Olney, Md. The sludge is dumped in trenches 24 inches wide by 30 inches deep and then covered with earth.

"Trenching is a very expensive way of disposing of sludge because it consumes a lot of land," Montgomery county official Phil Bennett, said. "The land can't be used for at least five years after you dump the sludge there."

Bennett said that in the last two years the county has used up over 300 acres of the site for dumping sludge.

Bennett said that composting, on the other hand, is a relatively inexpensive process that involves mixing the sludge with wood chips, drawing air through it to kill harmful bacteria, and then allowing it to change into a mulch-like material that can be used as fertilizer. Bennett said far greater quantities of sludge can be dumped on a composting site than on a like-sized regular sludge dumping site because of the differences in the process.