A federal appeals panel today reversed a lower court and dismissed a class-action suit on behalf of Vietnam war veterans who claim physical injuries to themselves and their offspring as a result of exposure to the defoliant Agent Orange.

In a 2-to-1 decision, the 2nd U.S. Circuit Court of Appeals said federal common law would not cover the suit.

The cases of 800 named plaintiffs from 25 judicial districts were transferred to the eastern district of New York and consolidated under U.S. District Court Judge George C. Pratt for pretrial proceedings. Plaintiffs also purported to represent the 2.4 million veterans who served in Southeast Asia from 1962 to 1971, in addition to most of their families.

The suit claimed that the defendants -- five of the largest chemical companies in the nation -- were liable for billions of dollars in damages. The defendants moved to dismiss the action against them on the ground of lack of juridiction.

Pratt denied the dismissal motion last year and ruled that the cases should be tried in federal court under rules of federal common law. The majority of the appeals court disagreed.

Further explanation was not immediately available.

The defendants were Dow Chemical Co.; Diamond Shamrock Corp.; Monsanto Co.; Thompson-Hayward Chemical Co. and Hercules Inc. All denied the allegations in the complaint.