Congress has voted to restructure a $1.1 billion program to modernize U.S. nuclear artillery as part of the fiscal 1985 defense spending bill.

The provision, which passed the Senate in July and then was accepted by House conferees, ends a seven-year battle between the Pentagon and Capitol Hill over how to replace an older generation of nuclear shells, 1,200 of which are stockpiled in Western Europe.

The Army last year unsuccessfully sought more than $4 billion to purchase 1,000 neutron shells for 155 mm guns. Now, according to congressional sources, it will be limited to producing 925 nuclear shells (none of them neutron ones) for both 155 mm guns and 8-inch howitzers.

A Senate aide said the legislation will halt production of a neutron 8-inch shell under way since 1981. He would not say what would happen to the neutron shells already produced, but said they would be counted against the 925-shell limit. By removing an internal device, a neutron shell can be converted to a traditional nuclear shell.

The congressional plan was worked out with defense officials, who had sought a cap of 1,200 shells. The legislation provides $50 million to the Energy Department in fiscal 1985 to purchase production equipment for a modern 155 mm nuclear shell.

The language was adopted by House-Senate conferees even though the House has yet to approve a bill authorizing Energy Department spending for nuclear weapons production. It was "an unusual procedure," one legislative aide said, "but they wanted to settle the issue."

The older nuclear shells, some of which have been in Europe for almost 20 years, have a range of less than nine miles, contain no safety features and are considered inaccurate by current standards. The new shells will have an 18-mile range and an electronic device allowing their destruction by remote control if necessary.

In the mid-1970s, the Army embarked on a modernization program that called for production of nearly 3,000 neutron 8-inch and 155 mm shells. Neutron weapons produce radiation as their primary lethal effect rather than a blast and heat, the main threat of other nuclear weapons.

Neutron weapons became controversial after U.S. plans for their production were disclosed in 1977. Because of the public outcry, Western European governments rejected them; as a result, finished 8-inch neutron shells have had to be stored in the United States.

Congressional sources said they hope the new shells will be accepted by NATO countries that now stockpile older shells.

Under the legislation, the modernization program is not supposed to interfere with a NATO program, adopted earlier this year, to eliminate 1,400 battlefield nuclear weapons in Europe. The legislation also requires Defense Secretary Caspar W. Weinberger to report to Congress on what mix of nuclear shells the Pentagon plans to build before it can begin spending funds preparing for their production.