BY ADMITTING misuse of public funds for private purposes, apologizing and agreeing to accept a vote of censure, Rep. Charles C. Diggs Jr. (D-Mich.) has made the best settlement he could with his colleagues in the House. Mr. Diggs was convicted last fall on charges of payroll kickbacks, of diverting his employees' salaries to pay personal and congressional bills. In his proposed settlement with the House, which also includes an agreement to repay more than $4,000, Mr. Diggs did not admit to a crime; he stated only that he had violated a House rule in "misusing my clerk-hire allowance" to pay "certain of my personal Expenses." This distinction should not affect his court appeal, however, for it amounts only to a plea bargain with his colleagues.

That is what members of the House ethics committee clearly recognized in their unanimous vote recommending that the House accept the settlement. This would avoid the possibility of Mr. Diggs's being given the harsher punishment of expulsion from the House. That step would have presented still other problems, anyway, since Mr. Diggs was reelected to the House after his conviction and, therefore, was the clear choice of the voters in his district to be their representative.

Even those Republicans in the House who had been pressing for expulsion of Mr. Diggs appear satisfied with his settlement proposal. Censure, after all, would not be a trivial affair. The House has not censured a member in nearly 60 years. In addition, Mr. Diggs already has lost his two committee chairmanships. Now the unanimity of the ethics-committee vote makes House approval of the proposal almost certain - and that is how the internal aspects of this matter should be resolved.