The president's AIDS commission approved its final report Friday night at the end of a contentious meeting that watered down some of the chairman's draft statements seen as too critical of the administration.

The 13-member panel altered the final draft chapter to drop harsh criticism of the administration's effort in fighting AIDS and also to drop a direct call for declaring a public health emergency because of the epidemic.The commission further voted to drop the recommendation of jail terms as a punishment for health workers who violate confidentiality when a patient is infected with the disease, and it took other recommendations by the chairman and made them mere options "regarding how the nation's response to the epidemic should be managed from this point onward."

In adopting the report it will send to the White House June 24, however, the President's Commission on the Human Immunodeficiency Virus Epidemic retained language urging anti-discrimination laws to protect people infected with HIV, the virus that causes the deadly acquired immune defiency syndrome.

The panel also agreed with the draft by its chairman, retired Navy Adm. James Watkins, that its recommendations would cost at least another $3.1 billion in state and federal money over current spending levels for fiscal 1988.

Watkins called the anti-discrimination section of the draft he proposed June 2 the key to success of all of the 12 chapters of recommendations on how the United States should wage war on AIDS.

Watkins had predicted a nearly unanimous vote on that section, but the recommendation squeaked by with eight of the 13 commissioners supporting it. The provision urges Congress to consider infection with the virus a disability and to outlaw discrimination against victims.