WASHINGTON (AP) _ The government Tuesday tentatively settled a lawsuit by eight Canadians who claimed they suffered psychological trauma from CIA-financed mind-control experiments that included doses of LSD, sources said.

The lawsuit claimed $8 million in damages the plaintiffs said they suffered from behavior-modification treatments administered in the late 1950s by a Montreal psychiatrist whose research was financed covertly by the CIA.

The case was scheduled to go to trial this week before U.S. District Judge John Garrett Penn, but Justice Department attorneys tentatively have agreed to settle the case by paying the plaintiffs a total of $750,000, according to one source familiar with the case who spoke on condition of anonymity.

Justice Department lawyers plan to ask Penn on Wednesday to postpone the trial while their superiors review the proposed out-of-court settlement, according to other sources familiar with the case.

The Justice Department must formally approve all settlements for more than $200,000 that are negotiated by government lawyers.

The 1980 lawsuit filed under the Federal Tort Claims Act originally sought $1 million for each of nine plaintiffs. Penn dismissed one of the plaintiffs, ruling that her claim was barred by statute of limitations.

But under the terms of the tentative agreement, she will share in the settlement, according to a source.

The mind-control experiments were conducted by the late Dr. D. Ewen Cameron, who headed the Allan Memorial Institute of McGill University in Montreal.

Cameron received nearly $60,000 over three years from a CIA-front organization called the Society for the Investigation of Human Ecology, according to a government summary of the case in court records.

There is no evidence that Cameron ever knew that the grants he received were financed by the CIA, the summary states.

Only two of the nine original plaintiffs were given LSD therapy during the time the CIA financed Cameron's research, according to court papers. But they underwent other forms of treatment such as unusually intense electroshock therapy or a technique known as ''psychic driving'' in which patients listen to a recorded message repeatedly for up to 16 hours.

Several patients were given LSD therapy during other treatments by Cameron before or after the three-year period he received CIA money.

The research organization was part of a project started in 1953 by then-CIA Director Allen Dulles to finance mind-control research, including experiments with LSD on unwitting subjects.

Project MKULTRA was begun at the height of the Cold War out of concern that the Soviet Union and China had obtained a stock of LSD, according to former CIA officials who gave depositions in the case.

Former CIA director Richard Helms, who was the agency's operations director in the late 1950s, recalled, ''There was concern that the Russians or the Chinese might use this on our people, might use it on our public officials.''

In his deposition, Helms recalled an incident when George Kennan, the U.S. ambassador to Moscow, flew to Berlin and made ''a most extraordinary series of statements which were regarded ... as quite uncharacteristic of Mr. Kennan's normal behavior.''

''There was, therefore, a feeling that perhaps he had been administered something of this kind which caused him to act in an aberrant way,'' Helms testified.

This incident prompted Dulles to order research into LSD, Helms recalled.

The research organization that financed Cameron was set up in 1955 after the suicide of Frank Olson, who was among a group of scientists who were given after-dinner drinks laced with LSD. After Olson's death, the CIA decided that experimentation on unwitting subjects could be conducted only under closer medical supervision.

The plaintiffs informally lowered their demands for payment to $175,000 apiece during earlier negotiations. The CIA offered to pay only $25,000 to each plaintiff during aborted talks several years ago.