The Associated Press settled a 10-year-old sex and race discrimination case yesterday, agreeing to pay more than $1 million to about 670 current and former employes, and to establish a five-year affirmative- action hiring program for women, blacks and Hispanics.

Under terms of the settlement, which must be approved by a U.S. District Court in New York, the AP will pay $998,000 to women and $100,000 to blacks employed at the news service between Nov. 29, 1972, and June 30, 1983.

"There is no larger settlement that we know about" involving a news organization, said Anna Padia of The Newspaper Guild, a local of which filed the suit in 1973.

The hiring plan calls for women to receive 37 percent of the first 100 vacancies and one-third of the rest for the next five years, beginning July 1. Also, 5 percent of all entry-level openings would go to blacks and 5 percent to Hispanics.

Currently, 22 percent of the AP's domestic news staff is female and 1.4 percent is black.

The settlement also sets goals for the promotion of women and establishes a recruitment program for blacks. The news service agreed to hire a consultant to work on increasing the number of black employes, to appoint an ombudsman to address the job problems of blacks at the AP and to employ a black journalism professor and a number of black journalism students each summer.

The settlement ends litigation begun when the Wire Service Guild filed a complaint with the Equal Employment Opportunity Commission on behalf of seven female AP employes. The complaint later became a class action suit against the AP on behalf of all black and female employes.

The EEOC joined the suit in 1978 after suspecting discrimination in hiring and promotion.

The affirmative-action program for Hispanics is part of a second consent decree signed by the AP as the result of a case filed by the EEOC.

The AP has consistently denied the charges of discrimination. Yesterday's settlement includes no finding of liability.

Keith Fuller, president and general manager of the AP, said, "We have maintained from the day this litigation began--and continue to state today--that the Associated Press does not discriminate against anyone or any group."