Playing with verve, touch and a rich variety of shots that was reminiscent of her confident form in 1979, the year she reigned as the monarch of women's tennis, Martina Navratilova today defeated Andrea Jaeger, 6-3, 7-6, to win the $300,000 Avon Championships at Madision Square Garden.

Navratilova, 24, thus finished the women's winter tour with a record of 28-2, and victories in five of the seven tournaments she played. In dominating the eight-woman tour finale, she regained a title she first won in 1979 and relinquished last year to Tracy Austin.

This victory was hardly unexpected. In the absence of Chris Evert Lloyd and the injured Austin, the two players ahead of her in the world rankings, Navratilova was a clear favorite to win a playoff that included seven newcomers.

What was impressive was the way she handled Jaeger, the remarkably poised and resolute 15-year-old who had beaten her three times in a row before Navratilova finally squelched her for the first time three weeks ago in Los Angeles.

Navratilova enthralled a crowd of 14,688 with an exciting blend of power and finesse.

She served and volleyed with her usual zest on the medium-fast synthetic carpet, but attacked in other ways as well.

She dinked and drop-shotted, repeatedly drawing Jaeger in to vulnerable positions at the net. She moved the ball around and kept it low with clever chips and slices, especially off the backhand. She smartly varied tempo, pace and spin, teasing Jaeger with short angles one moment, burning her with scorching drives the next. And she did terrible things to Jaeger's short, punchless second serves, moving in as Jaeger tossed the ball, hitting the returns from four or five feet inside the baseline, on her way to a commanding presence at the net.

Jaeger made some astonishing gets, and hit enough good service returns and passing shots to keep the outcome of the second set in double right up to the decisive tie breaker, but today Navratilova had enough feel for the ball to employ the full range of her abundant talent.

Jaeger won her share of points -- a tribute to her extraordinary legs, anticipation and scrambling ability -- but Navratilova dictated the tactical pattern of the match. Jaeger was like a lively character attached to the end of strings maneuvered by a master puppeteer.

The match was played at a brisk pace, consuming only 69 minutes. There was no fidgeting between points; it was all, "Just give me the balls and play." Mary Carilo, one of the commentators on the national Public Broadcasting Service telecast, has observed that "Jaeger plays tennis like she's double parked," and Navratilova does the same.

It didn't take the expatriate Czech left-hander long to demonstrate that she was in form. She held serve at love in the opening game -- crunch, zap, boom, pop -- and got the only service break of the set for a 3-1 lead. On the first break point, Navratilova chipped a sure backhand return deep, planted herself at the net and drilled a volley. A pattern was being established.

Navratilova appeared to hurt herself as she lunged for a volley in the eighth game, grimaced and grabbed the left side of her rib cage. But she served out the set with an ace. At the change game, she consulted with tour trainer Connie Spooner and took a pill. She explained later that she had "a pain underneath my heart . . . like a gas pain" that annoyed but did not inhibit her.

Navratilova broke serve for a 2-1 lead in the second set, getting to break point with an exquisite drop volley, cashing it in by jerking Jaeger up to the net with a backhand chip and drilling a backhand volley past her. But then she played a bad game, bungling two volleys to lose serve for the first time.

Navratilova broke again for 3-2, climbing on Jaeger's second serve at 30-40. A lesser fighter would have been discouraged, but Jaeger promptly ran off eight points to lead, 4-3.

As they headed toward the tie breaker, they played some marvelous all-court points. Navratilova attacked, always moving forward, setting up the kill with the backhand she hit with uncommon assurance. Jaeger counter-punched splendidly and ran like a sprite, her long blond braids flying as she dashed and lunged to keep in play shots that appeared to be sure winners.

Navratilova netted a backhand volley to lose the first point she served in the tie breaker and trailed, 0-2, but then reasserted herself. Her strength, unmatched among women players, took over. She overwhelmed with her weight of shot, driving volleys that were out of reach and angling overheads that even the swift Jaeger would have needed her minibike to catch up with.

During the tie breaker, Navratilova made a couple of volleys full stretch and half-volley pickups that are only possible when muscle is controlled by complete self-confidence. She ran out the tie breaker, 7 points to 3.When she threw up her arms in triumph, she had reason to be pleased with herself, beyond the $100,000 top prize that raised her winnings thus far in 1981, to $300,650.

"I felt I played up to my ability today, and that's what's most important to me now," said Navratilova, who appears ready to challenge Evert and Austin for the No. 1 ranking again. "I really felt that I could do what I wanted to with the ball and control the play. That's a great, great feeling."