DALLAS (AP) _ The former owner of a failed Dallas savings and loan who has been accused in a criminal indictment of diverting funds to keep the thrift afloat was released on a personal recognizance bond today.

Jarrett E. Woods Jr., former owner of Western Savings Association, agreed in federal court today to surrender his passport and limit his travel to the continental United States.

Woods was accused Thursday in the indictment of illegally diverting $18 million to pay off delinquent loans as a way of postponing the highflying thrift's $1 billion collapse.

Prosecutors did not oppose the personal recognizance bond in an 8-minute initial appearance before U.S. Magistrate Jane Jackson. Woods' next court appearance is scheduled for Nov. 1.

Woods, who was described by the U.S. attorney general as one of the industry's biggest ''bandits'' in Texas, had no comment upon leaving the hearing.

His attorney, Shirley Lobel, said she could not comment because of a gag order.

The 37-count indictment returned by a federal grand jury in Dallas charges Woods with bank fraud, misapplication of bank funds, making false ledger entries and conspiracy.

''We have corralled one of the biggest savings and loan bandits in Texas,'' Attorney General Dick Thornburgh told reporters Thursday. ''The freewheeling lifestyle and fraudulent management practices that led to Western's collapse helped set the trend for our national thrift crisis.''

The charges carry a maximum sentence of 185 years in prison and fines totaling at least $8.2 million or twice the loss proven by prosecutors.

Western's failure in 1986 when it was taken over by federal regulators cost the taxpayers $1 billion, the Justice Department said. A civil suit filed earlier this week by the Federal Deposit Insurance Corp. seeks to collect $560 million from Woods. It accuses Woods of spending $7 million of depositors' money in the months before Western failed.

The thrift, which Woods purchased in 1982 with $2 million in borrowed money, grew from $70 million in assets to $2 billion four years later, said U.S. Attorney Marvin Collins.

Collins said the case ''can be fairly characterized as an example of a real estate developer, Jarrett Woods, buying up a sleepy little S&L, moving it to Dallas, pumping it full of high-cost brokered funds and then lending the money out on high-risk loans.

''The indictment shows the great lengths that people will go to deceive regulators,'' Collins said.

The indictment charges that Woods diverted $16 million from a $60 million loan for a Houston real estate deal to businessman James Reagin, a major borrower who was behind on loan payments to Western.

Most of the money, plus $2.26 million that was diverted from the sale of Western property, was used to help Reagin pay off loans so that Western would not have to write them off as bad debts.

At one point, Reagin was behind on loans worth $64 million, Collins said.

''Just the loans to James Reagin would have likely caused the failure of Western Savings Association,'' Collins said.

Reagin, a Houston businessman who faces sentencing in connection with the failure of the Glen Ellyn Savings and Loan in Illinois, is cooperating with prosecutors in their investigation of Woods, officials said.

Woods is not accused of pocketing any of the funds diverted to Reagin. But Collins said Woods, as 100 percent owner of Western, was motivated by a desire to keep regulators from taking over the S&L.

The indictment also charges that Woods arranged for a Western subsidiary to pay a $48,000 commission to a company that had not earned the money. The indictment alleges the money was actually used to pay off a gambling debt Woods owed.

''There is nothing you can do basically in the short run to address these cases quickly,'' Collins said of the department's four-year effort to get Woods. ''You must have a long, large concerted effort.''