Prime Minister Margaret Thatcher's team of observers at last month's Rhodesian election concluded that it not was sufficiently free and fair, but it also demonstrated the approval of a majority of Rhodesians for the controversial "internal settlement" constitution.

The observers, led by former colonial secretary Alan Lennox-Boyd, now Lord Boyd of Merton, concluded that the election was fairly conducted and above serious reproach and represented the wishes of both black and white Rhodesians however calculated.

Boyd went further to say that "we are satisfied that the election did in fact constitute a kind of referendum on the constitution and that conversations with voters and the great jubilation among blacks and whites when the high turnout was announced demonstrated their approval of it."

He brushed aside arguments that the constitution reserves disproportionate power for Rhodesia's white minority, leaving it in virtual control of the civil service and military.

"We were not called upon to make political judgments of that nature," Boyd said in the report.

Boyd's report is being used as the foundation for a change in British policy toward Rhodesia leading to eventual recognition of the biracial government of Prime Minister-elect Abel Muzorewa that is to take office June 1.

Thatcher has already concluded personally that last month's election demonstrates the acceptance of the internal settlement by the Rhodesian people that had been considered necessary for British recognition and the lifting of economic sanctions against the former British colony.

Foreign Secretary Lord Peter Carrington, however, has convinced her that they must move cautiously on Rhodesia so as not to harm Britain's relations with black Africa, the rest of the Commonwealth of Nations and the United Nations. All of them refuse to recognize the validity of the internal settlement made by white Prime Minister Ian Smith with three black leaders or the election. They maintain the only acceptable solution is one that includes the black nationalists fighting a guerrilla war against Salisbury.

Carrington is sending emissaries to Rhodesia to establish permanent communications with Muzorewa's government and to the Commonwealth and other black nations in Africa to discuss the change in British policy.

Officials here hope Muzorewa will decide to increase the power of blacks in his government and make overtures ot the black Patriotic Front rebels so there would be a favorable response from the rest of Africa.

The Thatcher government's foreign affairs spokesman in the House of Lords said today that Britain's emissaries would also make approaches to the Patriotic Front rebels, although Thatcher referred to them as terrorists in the House of Commons today.