The Interior Department acted yesterday to put a final halt to the Army Corps of Engineers' hopes to build the controversial billion-dollar Dickey-Lincoln Dam on the isolated and environmentally fragile St. John River in northern Maine.

Acting Interior Secretary Donald Hodel told the Corps--the nation's dam-building agency-- that Interior was seeking transfer of the final decision to the Council on Environmental Quality (CEQ) because construction would cause "severe long-term environmental impacts" in the wild areas of upper Maine.

Interior and the Corps have been at odds for years over plans to build the world's 12th largest dam in an area that is unspoiled but also constantly short of cheap energy. Hodel told Lt. Gen. J. K. Bratton, chief of the Corps of Engineers, that the two agencies were at an impasse.

In effect, the CEQ would mediate between the two agencies. Hodel recommended that the council quash plans for the huge dam and focus on producing low-head hydro, or a series of small dams, in the area.

Interior's action put the department on the side of environmental opponents who have been assaulting Interior Secretary James G. Watt through most of this year. The action was taken by Hodel in Watt's absence on a western tour but Hodel made it clear that Watt also opposed the dam on environmental grounds.

All four members of Maine's congressional delegation oppose the dam, which Engineer Corps officials conceded made its construction unlikely. Sen. William S. Cohen, a Republican, said it would save only about 2.3 million barrels of oil at a cost of $1.5 billion annually.

The plan calls for construction of an 830-megawatt dam on the river which winds through 200 miles of mostly unspoiled wilderness before reaching Canada.

The proposal has caused heated controversy in Maine which usually divided along somewhat paradoxical party lines. Its chief supporter was former Democratic senator Edmund S. Muskie, an environmental leader in the '70s who caught constant flak for supporting the huge dam in his home state.

Hodel said the energy benefits from the Dickey-Lincoln would not counterbalance the environmental liabilities. He said construction of the dam would inundate 278 miles of rivers and streams in the St. John Basin, also inundate 80,455 acres of other land and result in construction of 386 miles of transmission lines through wild areas of northern New England.

The Corps has argued that the value of the hydroelectric power would outweigh the loss through terrain changes and recently contended that the value of the electricity was growing at four times the rate of the dam's cost.

New England is heavily dependent on expensive oil-fired energy production.

But Hodel contended that these gains were not outweighed by other losses and that the Corps underestimated the "severity and long-term nature" of the environmental harm in an environmental-impact statement filed a month ago.

Among the wildlife losses estimated by Hodel were destruction of black duck breeding grounds, summer foraging areas for moose and inundation of the wintering area used by half the deer in the region.

Work on the dam was halted previously because of the presence of the furbish lousewort, an endangered flower.