As many as 265,000 travelers who bought discount fares on the former Western Airlines are eligible to receive credit for up to 7,000 frequent-flier miles under a settlement approved in a Chicago court.

Judge Albert Green of Cook County Circuit Court approved the settlement last week of a class-action lawsuit filed three years ago against Western, which has since been acquired by Atlanta-based Delta Air Lines Inc.The lawsuit accused Western of overcharging customers when it levied cancellation or alteration fees ranging from 25 percent to 50 percent of the ticket price.

Lawyers Alvin W. Block and Russell C. Green, representing the plaintiffs, said Western added transportation taxes onto the basic fare price before computing the penalties, instead of levying the penalties only against the fare price.

Eligible fliers are those who changed or canceled the discount tickets on Western flights between Jan. 1, 1985, and April 1, 1987.

Under the settlement, which carries a maximum cost to Delta of $100,000, the airline did not admit any wrongdoing but agreed to give affected travelers their choice of a $4.80 refund, 3,000 more miles on a Delta frequent-flier account at any time, or 7,000 additional miles if the traveler uses them by Dec. 31.

Green said the deadline for rebates, some of which could have been higher with documentation from customers, was Aug. 2, and notices were sent before that to 265,000 people and published in more than 60 newspapers.

Claim forms are available from Delta, many travel agents and airports, as well as from the lawyers representing the plaintiffs.

Western operated mostly in the West but also served other cities including Chicago, New York and Washington.