In a major policy switch, the South African government is offering a deal to the people of Crossroads squatter camp outside Cape Town that could end the black shantytown's 10-year conflict with the white authorities.

Officials say 40,000 of the estimated 100,000 persons in Crossroads and adjacent squatter communities have accepted the deal, which provides that the government will legalize their presence in the Cape Town area provided they move to an officially recognized black township called Khayelitsha, two miles further from the city.

The officials say if another 30,000 accept, the government will have reached its target of reducing the squatter camp's population so that it can be developed as a black residential area.

The arrangement means the government has abandoned a decade of efforts to raze the labyrinthine slum, which made Crossroads a symbol of black resistance to the segregationist system called apartheid as the squatters defied bulldozers and demolition squads, rebuilding their flimsy shelters each time they were flattened.

It could also mean that about 70,000 persons living in Cape Town in violation of laws that limit the entry of blacks into urban areas will have their presence here legalized.

The announcement this week by Timo Bezuidenhout, the senior white official in charge of administering blacks in western Cape Province, represents the government's second policy concession to blacks in the region since 18 Crossroads residents were killed and 234 injured in clashes with the police two months ago.

The clashes were prompted by rumors that the squatter population was about to be forcibly removed to Khayelitsha. An international outcry appears to have jolted the government into reviewing its racial policy for the region.

A week after the clashes, Gerrit Viljoen, the white minister responsible for black affairs, announced that three other black townships near Cape Town whose inhabitants also were scheduled for removal to Khayelitsha would not be demolished after all.

He hinted at the time that he might reprieve Crossroads as well if about three-fourths of the inhabitants would "cooperate" by leaving the packed squatter camp voluntarily so that it could be developed as a black residential area for the remaining fourth. But this was offset by an implicit threat of forcible action if his appeal went unheeded, which appeared likely then.

Crossroads residents resisted the move because, they said, transportation costs from Khayelitsha would be higher and they feared the authorities would use the relocation to weed out "illegal" residents and send them back to distant tribal "homelands" which they left to seek work in Cape Town.

Now the government has offered to subsidize the transportation costs, and is dangling the carrot of legal status to counter the fear of repatriation.

The offer is not wholly explicit. Bezuidenhout has told the squatters their position will be legalized for 18 months if they move to a specified "site-and-service" sector of Khayelitsha, where they will be provided with tents to live in while they build new shacks. The government will reconsider their position at the end of that time, says Bezuidenhout, adding somewhat ambiguously that "there will, however, be no repatriations."

Most observers see this as an obvious maneuver to ease a politically difficult reform through the ruling National Party in two stages instead of one. Bezuidenhout has gone out of his way to publicize the pledge of no repatriation at the end of 18 months, which effectively commits the government. But so deep is the suspicion among the squatters after years of confrontation that many are still hesitant to accept the deal.

"I am still negotiating with them," Bezuidenhout said in an interview today. "I hope more will accept because I think at last we have a rational solution to the problem."

Critics of the government also have welcomed the policy change, although Sheena Duncan, president of the respected Black Sash civil rights organization, feels it is less a government concession than a victory for the squatters.

"The people of Crossroads have won their battle," she said.

Laws restricting the entry of blacks into urban areas apply throughout South Africa, but they have been particularly stringent in western Cape Province.

The official reason is that the government regards the region as the "natural home" of the 2.6 million mixed-race people called Coloreds and wants to shield them against job competition from the majority black Africans.

Another, unstated -- though possibly more trenchant -- reason is a desire by the white administration to ensure that the region where their Dutch pioneer ancestors first landed in the 17th century remains one part of the country where Africans are a minority.

The means for doing this was called the "Colored labor preference policy," which barred employers from hiring an African west of a line dissecting Cape Province unless he could certify that there was no Colored person available for the job.

As a corollary, the government stopped building houses for Africans in the western Cape. But employers continued to hire Africans, who put up their own shanties.

Three years ago, the government tried to consolidate the Cape Town Africans in a new township situated away from the "white" city, with the separate Colored townships serving as a kind of ethnic buffer.