The Environmental Protection Agency yesterday backed down from a potentially embarrassing public confrontation with an agency whistle blower who had accused agency officials of engaging in "criminal activities" to silence his criticisms of hazardous waste policies.

In a last-minute agreement with toxic waste specialist Hugh B. Kaufman, the EPA admitted no wrongdoing but promised not to interfere with Kaufman's freedom of speech.

The settlement averted a public airing of Kaufman's allegations about EPA officials in charge of the nation's toxic waste cleanup programs, particularly the former head of the division, Rita M. Lavelle, who was fired last week. An administrative law hearing on the case was to have begun yesterday.

Kaufman says that efforts to silence him were undertaken at Lavelle's request, a charge she has denied under oath to Congress. But a House Science and Technology subcommittee later obtained evidence that she ordered an investigation of Kaufman and said she wanted him fired.

The subcommittee chairman, Rep. James H. Scheuer (D-N.Y.), withdrew a threat to refer the case for a perjury prosecution when Lavelle was dismissed. But the firing added fuel to a growing controversy about the toxic waste programs, which were already at the root of an unprecedented contempt case against EPA Administrator Anne M. Gorsuch. Six congressional panels now are looking into allegations of political favoritism in the management of the programs.

Kaufman called the agreement "not only a victory for me" but for other EPA employes who will be interviewed by those congressional committees. The settlement "sends a signal to all EPA employes that they have protection if they give testimony to Congress," he said.

He also said he would turn documents gathered for his case over to Congress and the Justice Department, and he repeated his allegation that "some may show criminal wrongdoing" at the highest levels of the administration--"I'm saying the White House," he said.

In an impromptu news conference after the settlement was announced, Kaufman declined to elaborate on what his documents contained, although he said polluters had communicated their complaints about him to the White House, which passed them on to the EPA.

In a later interview, he said, "All I've got is pieces of the puzzle. I'm going to give them my pieces."

EPA spokesman Rusty Brashear said yesterday that "So long as Mr. Kaufman does not violate today's agreement, he is of course entitled to pursue his grievances in any way he thinks proper."

Yesterday, after three hours of intensive bargaining one floor below a courtroom jammed with reporters ready to hear Kaufman's charges, lawyers for Kaufman and the EPA emerged to tell the Labor Department's deputy chief administrative law judge, Everett Thomas, that they had reached a "final and comprehensive resolution" of the case.

As part of the settlement, Kaufman agreed to repay the agency for any personal phone calls placed on EPA phones. The EPA agreed to withdraw Kaufman's "unsatisfactory" personnel rating and compensate him for salary losses resulting from the unsatisfactory rating.

The agency also agreed to give Kaufman a "mutually agreeable work assignment," which Kaufman said answered his concern "that EPA would send me to Nome, Alaska."

The settlement resolves a formal complaint filed by Kaufman last July, in which he accused the agency of harassment and illegal spying on him.

The Labor Department, which is responsible under several environmental laws for protecting EPA whistle blowers, found in Kaufman's favor last December. The EPA appealed, saying it disagreed with the decision and thought it could overturn it.

Kaufman said the agreement was probably as good as he could have gotten after a full hearing, which would have "wasted thousands of dollars of taxpayers' money and taken more time away from hazardous waste issues."

"I'm not a prosecutor," he said. "I'm just a bureaucrat trying to protect the American citizen from hazardous waste."