Minnesota and South Dakota Democrats reached an eleventh-hour compromise yesterday with the national party that will allow each state to be fully represented at the national nominating convention in July.

On Tuesday, both states were tentatively stripped of some of their delegates and passed over in selection of hotel rooms and convention floor seating as a penalty for scheduling their delegates to be selected Feb. 23, two weeks earlier than party rules allow. Both states argued for exemptions because the dates had been set by their legislatures.

In the compromise worked out early yesterday, Minnesota party leaders agreed that participants in the state's Feb. 23 precinct caucuses would mark presidential preference ballots, but the ballots would be sealed and not counted until March 8, the earliest date allowed under national party rules.

Later party officials announced that they had reached a compromise with South Dakota. That state will still hold its primary Feb. 23, but it will be only a "beauty contest," and delegates will be picked later at a single statewide caucus, possibly on March 12. South Dakota officials said that the caucus would reflect the results of the primary election, although technically those attending the caucuses cannot be bound by the primary results. South Dakota had resisted holding caucuses because of a tradition of primaries in the state going back to 1916.