The Justice Department and Olin Corp. yesterday announced settlement of a major industrial dumping suit involving DDT, an insecticide Olin produced for 23 years at a site in Huntsville, Ala.

The company agreed to a comprehensive cleanup, plus payment of $24 million to 1,000 people who live near the contaminated area.

The lawsuit, brought under the so-called superfund act and several other environmental laws, charged that Olin, operating in a leased facility at the Army's Redstone Arsenal in Huntsville between 1947 and 1970, illegally caused DDT contamination of thousands of acres, including the neighboring Wheeler National Wildlife Refuge.

The DDT was released into the swampy wildlife refuge, where it was retained in the bodies of birds, fish and other wildlife in the area.

Lois Schiffer, an attorney who worked on the case for the Justice Department's Lands and Natural Resources Division, said the settlement is particularly significant as the first in which extensive health care and monitoring are required.

Of the $24 million to be paid to private residents of the area over the next four years, $5 million must be put into a trust fund to be used for health care and monitoring for residents in Triana, a small town downstream from the DDT plant site.

That award is the result of private lawsuits, in addition to the government lawsuit, that were filed by about 1,000 Triana-area people who had eaten fish contaminated with the DDT. Their personal-injury actions against Olin were resolved by yesterday's settlement.

The remaining $19 million will be distributed directly by Olin to those private residents over the next four years.

The agreement will require Olin to spend whatever amount is required over a 10-year period to remove DDT from the area and to ensure fish in the area have no more than five parts per million of DDT, the safety level set by the Food and Drug Administration for fish sold in interstate commerce.

David Batson, an attorney who worked on the case for the Environmental Protection Agency, said a study performed in 1980 by the U.S Army Corps of Engineers found contamination levels in fish between 50 and 500 parts per million. He added that Olin will have to remove huge amounts of DDT from the area, including 837 tons in the wildlife refuge alone.

The method of the cleanup is being left up to Olin, but will be subject to public comment and approval by the Justice Department and the U.S. District Court.

Olin has estimated that its current cleanup plan, which has not yet been approved or made public, would cost the company $10 million. But Batson added that if that remedy does not lower the DDT level in fish to the required levels, "The U.S. government will require Olin to go forward on additional remedies--whatever it costs."

Olin will also be required to establish a $375,000 fund for projects to "mitigate" the effect of DDT on the wildlife refuge.