With NFL coaching vacancies becoming more scarce, George Allen has softened his contract demands and some progress is being made toward signing a new contract with the Redskins, The Washington Post has learned.

Neither Redskin president Edward Bennett Williams nor Allen was available for comment yesterday, but sources say the two met last week, and will meet again this week in an attempt to resolve the issue.

Allen's original seven-year contract runs out on March 1, and neither the Redskin coach nor Williams has signed the new four-year contract Allen originally agreed to last summer.

NFL sources familiar with the situation say that Allen's options have been severely reduced in the last few weeks.

They say possible head coaching vacancies at Los Angeles and Detroit no longer exist because the Rams likely will stick with Chuck Knox and the Lions probably will name Monte Clark head coach next week.

The situation in Buffalo is still wide open, according to sources, but club owner Ralph Wilson is leaning more in the direction of Stanford coach Bill Walsh, Allen's price, they say, is simply too high.

Other sources familiar with the Washington situation say that Williams and majority owner Jack Kent Cooke are standing firm on their original offer to Allen.

That offer included a raise from his current $125,000 a year salary to about $250,000 a year, as well as provisions that would provide tighter financial controls on Allen. Allen has strongly opposed any such financial restrictions on his operation.

Allen told United Press International recently a successful coach needs total control of the football team and its resources.

"You've got to have complete control of the football program to win, and even then it's difficult," he said.

Allen has had free rein with the Redskin budget in his first seven years. He has the best training facility in football. His player payroll is the highest in the league. He has more assistant coaches than any NFL club and his injured reserve list of 15 players in 1977 also led the league.

Williams and Cooke also want a closer check on Allen's free-wheeling trading of draft choices. The Redskins, this year, for example, do not pick until the ninth round of the NFL draft.

Those same sources say that Allen has, indeed, been testing the NFL coaching waters, that he has been playing the waiting game to see if there was interest in his services elsewhere.

But now that the possible vacanies in Los Angeles, San Diego, Kansas City, Detroit and Buffalo have been filled, or ate about to be filled with other people. Allen has shown more willingness to work out his problems with the Redskins.

At Redskin Park, sources say Allen has also gotten over his orginal depression after not making the playoffs, and is plunging into his work as if it were business as usual.

Those sources also are saying they expect the issue to be resolved by Feb. 1, and that they expect Allen will return next season.

Allen has said all along that he wants to stay, I love this area, the people have been great," he said recently.

But he added, "if you can't have what you want from the standpoint of authortih and necessities - and it may be just a projector - and you have to fight for things like that all the time, if you waste time on trivial details, that takes time away from concentration on the opposition."