WASHINGTON (AP) _ The Federal Communications Commission approved the merger of two long- distance telephone companies Tuesday, MCI Communications Corp. and Telecom USA Inc.

The merger is expected to help MCI make greater inroads into the long- distance telephone market dominated by AT&T.

Kathleen Keegan, an MCI spokeswoman, said the company expects the merger to be completed before the end of August ''subject to the receipt of certain state regulatory approvals.''

''We are pleased that the FCC has given us approval,'' she said.

MCI announced last April that under the terms of an agreement reached with Telecom it would acquire all outstanding shares of the company's common stock for $42 a share, for a total purchase price of about $1.25 billion.

MCI, which has headquarters in Washington, is the nation's second largest provider of long-distance service. It has 19,500 employees and had revenue in 1989 of $6.5 billion. It serves residential and commercial customers with long distance, voice and data services both in the United States and overseas.

Telecom USA is the fourth largest U.S. long distance company. Headquartered in Atlanta, it has 5,000 employees and had 1989 revenue of $713 million.