The Environmental Protection Agency yesterday relaxed the nation's smog standard, opening what is expected to be a protracted legal battle between industry and environmental groups over air quality in major citles.

EPA Administrator Douglas Costle said he relaxed the standard by 50 percent -- from.08 to.12 parts per million -- after "a careful reevaluation of medical and scientific evidence."

The American Petroleum Institute (API) immediately petitioned the U.S. Court of Appeals here to overturn the standard. API President Charles DiBona said that even the new relaxed standard "will cost billions of dollars without significantly improving the quality of the environment or the health of the public."

However, Richard Ayres, an attorney with the Natural Resources Defense Council, said of the relaxation, "As a public health decision, it is indefensible. It is a purely political and economic decision. It does not allow an adequate margin of safety." Environmental groups, he predicted, will file suit soon to strengthen the standard.

The new standard means that 10 to 20 cities will be judged clean enough, as far as smog is concerned, and won't have to curtail auto traffic or impose strict pollution controls on industry. Among these are Albuquerque, Wichita, Des Moines, Tucson and Rockford, Ill. Only two cities met the other standard.

Such major cities as Washington, Richmond, Baltimore, New York, Denver, Houston and Los Angeles still won't meet the new standard, and will be forced to adopt strict plans to limit auto and industrial pollution by 1982.

The relaxation of the smog standard comes at a time when other clean air rules are being aggressively challenged by industry and the White House. EPA will soon have to decide on power plant regulations, a policy for cancer-causing air pollutants and new standards for sulfur dioxide, nitrogen oxides and other pollutants.

The relaxed standard will not have any effect on the new air pollution control plan approved last November for the D.C. area by the Metropolitan Washington Council of Governments (COG), according to James Alexander, senior air quality specialist in COG's Department of Health and Environmental Protection.

The plan, which must be approved by the District, Maryland and Virginia governments, would require all automobiles in the metropolitan area to have yearly exhaust emission tests. It also would eliminate free parking for government employes in the District.

Alexander said the COG plan, despite the restrictions it would impose, would fall short of both the old ozone limitation (.08 parts per million) and even the new one (.12) part per million). When the plan was passed, COG asked EPA for an extension from 1982, the deadline for compliancem to 1987.

Though Alexander said the new ozne limitation represents a "very large increase," he said that air quality in metropolitan Washington still far exceeds the new ceiling during the summer. There have been times, he said, when the ozone level has reached as high as.225 parts per million -- almost twice the new relaxed standard.

EPA's Costle said he decided on the final standard before a Jan, 9 meeting with chief White House inflation-fighter Alfred Kahn and Charles Schultze, chairman of the Council of Economic Advisers, who, along with White House science adviser Frank Press, urged Costle to relax the standard even further.

Costle acknowledged that, in the past few weeks, the White House, which has been concerned about the inflationary impact of environmental regulations, "has pretty thoroughly interrogated us... They said, 'Would the evidence justify a higher standard?" he said.

EPA estimates that the.12 standard will cost industry, government and consumers about $4.5 billion a year by 1987 (including $2.5 billion for auto pollution equipment). But annual costs will not exceed $100 million a year before 1982, the agency said. The White House regulatory group, however, has estimated the eventual cost at $15 billion, while oil industry estimates range up to $27 billion a year.

However, Costle said the Clean Air Act requires the standard to be based solely on public health. "Consideration of cost is not germane," he said.

In setting a new smog standard, Costle also changed the basis of the standard from photochemical oxidants to ozone, a transparent gas which, combined with other chemicals and sunlight, produces smog. Environmentalists and some scientists say that while ozone is the principal component of smog it is not the most lethal, and that the new standard thus ignores some unhealthy, and even cancer-causing elements.

"The deregulation of other oxidant compounds," the American Lung Association, the American Lung Association, the League of Women Voters and several environmental groups contended, "is not based on any new understanding of the evidence linking oxidants to disease, for the case against oxidants is, if anything, stronger than it was seven years ago," when the original.08 standard was set.

"Rather," the groups added, "it has been dictated by the new penny-wise and pound-foolish economics now ascendant in the White House, that would rather wait until the damage is done than spend a penny on precaution."

Costle said that the.12 standard is "principally designed to protect the nation's five to 10 million asthmatics and others with chronic respiratory diseases, most of whom reside in urban areas with high ozone levels."

However, he added, "Even healthy individuals engaged in vigorous outdoor activity, such as construction work, freight-handling and athletics, may well experience... chest tightness, coughing, wheezing and headaches... as a result of ozone concentrations ranging from.15 to.30."

DiBona of the American Petroleum Institute disputed EPA's studies, contending that the.12 standard is "still far more stringent than medical evidence shows is necessary to protect public health. The best avaiable evidence indicates that ozone below a level of.25 has no adverse effects on human beings."