Virginia Gov. Mills E. Godwin yesterday gave the approval of the state to a highly controversial refinery proposed for Portsmouth that would be the largest refinery on the East Coast and the first built on the coast in some 20 years.

The governor said he took the step with full awareness of the environmental concerns voiced by some state agencies and citizens' groups about the Hampton Roads Energy Co. project, and with the knowledge that the proposaI may still be killed at the federal level or in the courts.

But he said under law his veto would have killed the project. "The only way the project can receive further consideration and proceed to a fully considered final determination is to give my approval, and accordingly I here by do so."

The fate of the proposed $550 million project, which would refine 175,000 barrels of crude oil a day on the banks of the Elizabeth River, now rests with officials of the U.S. Army Corps of Engineers and may ultimately be decided at the highest levels of government in Washington.

Critics of the refinery charge that even with the most advanced pollution controls with which it would be required to operate, it would overload both the already smoggy air over Hampton Roads and the ecologically endangered waterdays of the region.

Critics charge further that it would geometrically increase the threat of catastrophic oil spill in an area crucial to the welfare of both the James River oyster and the Chesapeake Bay blue crab.

Backers of the project, including the Atlanta-based Cox newspaper chain, which is financing it, say it would provide much-needed refinery capacity on the East Coast and jobs and tax revenue for the sagging economy of Portsmouth.

Godwin said the pros and cons of the refinery were spelled out in "voluminous" documents forwarded to him by state agencies, and he said he had given all the information "mature consideration."

"Stringent and meticulous" safeguards for protecting our air and water quality and our vast marine resources" have been required by state agencies and must be incorporated into the design of the refinery, he said.

"I am in accord with the desire of our marine life interests to fully protect the seafood industry against serious hazard . . ." Godwin said.

"If the decision . . . were a choice between the economic benefit to the city of Portsmouth and the survival of the oyster industry . . . I would of course oppose the refinery," Godwin said.

"If the evidence were overwhelming that the refinery would indeed damage the seed oyster beds of the lower James River for years to come . . . I would oppose of the refinery. . .

"If the choice were limited to having either the refinery or the oyster beds of the James River and its tributaries, I could not support the refinery."

"But the choice," said Godwin, "I'm not so clear or narrow."

In addition to the economic and energy benefits of the refinery, he said, "I am very conscious of the concerns expressed by various economic interests that if the governor places the Commonwealth in opposition to the refinery because of the possibility of cumulative hazzards involved . . . a cloud might come over any future economic development in the Tidewater area. . ."

He is also conscious, Godwin said, that "nobody can guarantee absolutely that there will be no (environmental) accidents . . . whether the refinery is built or not"

"Under the law if the governor does not approve the project, the federal authorities will be governed by that decision. If he approves the project, then and only then may it be forwarded to higher authorities and perhaps ultimately to the courts for a final determination."

Godwin said he was giving his approval to speed the refiney project to further evaluation. The project was first proposed eight years ago, he said, and "the time for determination is at hand."

Approval by the Army Corps of Engineers is the last step in the process of obtaining permits for the refinery - a process that began more than four years ago.

Corps approval has proven to be the most lengthy process involved in the efforts to build the facility involving corps preparation of a lengthy environmental impact statement and solicitation of comments from more than 30 federal agencies.

Opposition to the corps permit from the Environmental Protection Agency, the U.S. Fish and Wildlife Service and the Marine Fisheries Service make it certain final action on the project will be made at the higher levels of the corps rather than at the local district office in Norfolk.