The International Olympic Committee settled a longstanding dispute with Taiwan yesterday and announced that it would be allowed to participate in future Olympic competitions, opening the door for Taiwan and China to take part in future Games.

Taiwan has agreed to call its national Olympic body the Chinese Taipei Olympic Committee, after Taiwan's capital, and backed down from previous insistence that it be allowed to use the name, flag and anthem of the Republic of China.

Yesterday's compromise was viewed here as a significant development in the decades-long struggle over who represents China on the international parquet. The National Chinese government of Taipei claims to represent all of China, while the mainland Communists say Taiwan is but a province of China. Recently, both governments have moved quietly to come to terms on the diplomatic front with their special situation.

Some American observers said that although Taiwan's concessions were significant, they may merely represent its efforts to avoid being shut out of international relations in the face of the widespread recognition of the Peking government.

Taiwan has allowed scientists and writers to participate in international conferences with their mainland counterparts and the Taipei government has allowed its students in the United States to make contacts with mainland students.

Taiwan has made similar concessions in individual sports organizations, such as the international volleyball and badminton federations, and Taiwanese athletes have competed against mainland teams on several occasions, including a track meet in California last year. Nevertheless, if China and Taiwan were to participate in the 1984 Olympic Games, it would focus wide attention on the two governments and challenge Taiwan's claims to represent all of China as it did on the IOC until 1979.

China was admitted to the IOC in 1979 and competed in the 1980 Winter Olympics in Lake Placid, N.Y. It joined the U.S. boycott of the 1980 Summer Games in Moscow because of the Soviet invasion of Afghanistan. Taiwan was barred from the 1976 Summer Olymipcs after Peking applied pressure to the host Canadian government.

According to news service reports from Lausanne, Switzerland, where the agreement was signed yesterday, the Taiwan's committe issued a statement accusing Peking's sports authorities of "cheating themselves by arguing that the IOC in past years that the Olympic committee in Taiwan is a branch" of the Peking Olympic committee.

The statement said the international committee's recognition of the renamed committee "shows it clearly separated sports from politics, which is what we have been fighting for for years."

There was no immediate reaction to the agreement from Peking, but qualified observers here said it was unlikely that the Chinese would object to the agreement, since Taipei clearly no longer insists on using the "Republic of China" flag and insignia.

According to Reuter, the new Taipei committee's emblem is a five-petaled flower with the traditional Nationalist while rising sun in a blue circle. The accord apparently became possible after Peking authorities agreed to let Taiwan retain the rising sun of their national flag, but without the red background that is common to the Chinese and Taiwanese flags.