The Supreme Court yesterday threw out former Mobil Corp. president William P. Tavoulareas' libel suit against The Washington Post, ending a bitter and costly eight-year battle that called into question the boundaries of investigative reporting.

The court, without comment or dissent, let stand a 7-to-1 appeals court ruling last year that said a 1979 article reporting that Tavoulareas "set up" his son in a shipping company that did business with Mobil was "substantially true" and was not libelous.

A federal court jury found in 1982 that The Post and reporter Patrick E. Tyler had libeled Tavoulareas and awarded him $2.05 million. The trial judge overruled the jury, but he was later overruled 2 to 1 by a three-judge appeals court panel. Last March, the full appeals court overturned that ruling.

The original decision by the three-judge appeals panel said a newspaper's reputation for investigative stories, in itself, could be evidence of "a motive" for publishing a "knowing or reckless falsehood," prompting fears among press lawyers that it would chill investigative reporting. Senior Judge George E. MacKinnon wrote the opinion and was joined by then-Judge Antonin Scalia. Scalia, now on the Supreme Court, did not participate in yesterday's action.

The action let stand the appeals court's strong rejection of the three-judge panel's reasoning and result. The full Court of Appeals offered a broad vindication of the investigative reporting techniques used by Tyler and The Post, saying the record "abounds with uncontradicted evidence of nepotism" in favor of Tavoulareas' son.

Post Executive Editor Benjamin C. Bradlee called the high court's dismissal of the appeal a great "victory for responsible journalism," quoting Tavoulareas' comments after the jury handed down its verdict against The Post in 1982.

"All these years later I can't say it much better," Bradlee said. "It's been hanging over us for seven years. It's good to get it behind us with the knowledge that we were right on the facts."

Tavoulareas, in a statement, said that "a unanimous jury found that The Washington Post published a false and defamatory article about me, my relationship with Mobil Corp. and my relationship with my son . . . . Nothing any judge did thereafter can take that away." Tavoulareas said he "had high hopes" that the Supreme Court would review the ruling of the appeals court, whose judges "so obviously substituted their view of the facts for those found by the jury."

One year after the story, Tavoulareas and his son, Peter, filed a $50 million libel suit against The Post. They said the story and another on Dec. 1, 1979, had caused them "public disgrace, scorn and ridicule" and had damaged their business and professional relations.

After a 21-day trial and 18 1/2 hours of deliberation, a six-member jury found in July 1982 that The Post, Tyler and a free-lance reporter had defamed Tavoulareas but not his son, and awarded the Mobil executive $250,000 in compensatory damages and $1.8 million in punitive damages. The trial judge, Oliver Gasch, set aside the verdict and damages award in May 1983.

In his appeal to the high court, Tavoulareas challenged lower-court rulings that he was a "limited purpose public figure," and as such had to show "actual malice" in order to win his case. That meant that Tavoulareas had to show that The Post printed the article either knowing it was false or with "reckless disregard of whether it was false or not."

Tavoulareas said the appeals court's sweeping endorsement of investigative journalism had "virtually destroyed" the ability of the "great majority of American business executives" to sue the news media for defamation.

Tavoulareas had argued that a comment Tyler made while investigating the story -- that he was trying to "bring down" Mobil -- showed Tyler was adopting an adversarial position toward him.

But the full appeals court said that even if Tyler had taken an "adversarial stance" toward Tavoulareas, that was "certainly not indicative of actual malice under the circumstances where, as here, the reporter conducted a detailed investigation and wrote a story that is substantially true."