Citicorp, the nation's largest banking company, will break into the Washington market through the acquisition of National Permanent Bank and will be paid $51.8 million in government funds to take the ailing thrift off the government's hands, federal regulators said yesterday.

The decision by the Federal Home Loan Bank Board, which put National Permanent up for sale in January, is a major victory for Citicorp, which was vying with oil billionaire Gordon Getty for the right to buy the District's second-largest thrift.

National Permanent has 13 branches in the District and one in Maryland, giving it full branching rights in that state. Under newly adopted bank board policy, Citicorp also will be able to branch the thrift into Virginia.

The decision ends more than 18 months of lobbying by Citicorp for permission to do business in the Washington area either by buying an existing financial institution or starting a new one.

National Permanent has lost money in each of the last four years. At the end of 1985, the thrift had a negative net worth of $80 million under generally accepted accounting principles. Net worth is the difference between assets and liabilities. By selling the institution rather than liquidating it, the bank board, which regulates and insures the nation's thrifts, will not have to pay for the entire deficit.

In addition to providing $51.8 million in cash, the bank board has promised to shield Citicorp from certain liabilities in the future, but neither Citicorp nor the bank board would discuss the details. Under the plan, Citicorp will have to pump an estimated $90 million into National Permanent to cover the institution's losses and to bring its net worth to 6 percent of liabilities.

The bank board said the sale could be completed as soon as the Federal Reserve Board, a key banking regulator, approves the plan. The Fed, which is expected to give a green light, could make a decision within days.

Citicorp's move into the District is the latest development in the rapidly changing and increasingly competitive Washington banking business. It is the latest example of Citicorp's push to sell a wide variety of financial services to consumers.

Since the 1970s, Citicorp has led the way nationwide in using technology and legal loopholes to get around barriers regulating barriers on what banks can sell and where.

Citicorp first bid for National Permanent several months ago with a plan to convert it into a bank by merging it into American Indian National Bank, a District bank with a single office.

The management of National Permanent submitted a counterbid from a group of local investors headed by Getty, which called for maintaining the institution as a thrift.

According to bank industry sources, the bank board in May was leaning in Getty's favor, largely because Citicorp had said it wanted to convert the thrift into a bank. The bank board did not want its beleaguered deposit insurance fund, the Federal Savings and Loan Insurance Corp., which insures thrift deposits up to $100,000, to lose any more premium-paying members.

The fund is strained from record thrift failures across the nation.

The bank board finally accepted the Citicorp offer after the New York bank company promised to operate National Permanent as a thrift institution specializing in housing finance, rather than converting it to a commercial bank.

Under yesterday's agreement, Citicorp cannot convert the thrift to a bank without unanimous approval by the three-member bank board.

The purchase of National Permanent fits into Citicorp's nationwide strategy of expanding its consumer business by buying up ailing savings and loans at bargain prices.

Since 1982, Citicorp has bought failing thrifts in California, Illinois and Florida. The bank has been barred by federal regulators from using these S&Ls to market services offered by other Citicorp subsidiaries.

But Citicorp has asked the federal bank regulators to allow the savings and loans and other Citicorp affiliates to be able to jointly sell services such as real estate mortgages. It also wants the thrift to be able to advertise and sell products and services of other Citicorp subsidiaries and affiliates such as the Diners Club travel and entertainment card.

Citicorp said it will comply with the community investment requirement of a newly enacted District banking law even though it will be operating a thrift here.

Under those rules, Citicorp will invest between $50 million and $100 million in the District, will open two branches in poor areas of the city where there are now few banks and will create at least 200 jobs here.

Citicorp officials would not comment on whether the company will continue to try to buy American Indian bank.

Citicorp may face a federal investigation in connection with a $28,200 payment it made to a friend and adviser to D.C. City Council member Charlene Drew Jarvis (D-Ward 4), who heads the council committee in charge of bank licensing in the District.

No significant opposition to the sale is expected from Congress or the government, banking sources said, despite the possibility of an investigation.