Construction of the northbound extension of the Red subway line may begin as early as January 1978, Robert R. Kiley, director of the Massachusetts Bay Transit Authority, said Thursday.

The U.S. Department of Transportation granted awards totaling over $110 million dollars for MBTA improvements. The largest award, $42 million, will finance a new Harvard Square station, and new rail and stations to serve Porter Square, Davis Square, and the Alewife-Brook Parkway.

Peter N. Stowell, director of the Urban Mass Transit Authority said yesterday that city, state and federal agencies "have been working on the planning stages of the project for up to three years," adding that the planning phase had cost over $6 million.

Stowell said public hearings, environmental impact studies, and usage surveys contributed to a comprehensive "transit system management" plan.

Although funds are available now, Stowell said it would be at least two or three months before "they put a shovel in the ground."

Radical Change

City officials contacted yesterday agreed that the new station will change Harvard Square but disagreed about the effect of the construction period.

During the construction period, MBTA riders will enter and exit in front of Holyoke Center or near Brattle Square, final location of the new station will be on Massachusetts Avenue north of the present bus terminal.

City Councilor Francis H. Duehay '55 said yesterday the changes will take four to five years to complete, and when it is finished, the Square will be "much, much more attractive visually."

He said he is planning a general information meeting for the public in two or three weeks.

James L. Sullivan, Cambridge city manager, said the Red Line extension will make Harvard Square "spectacularly different." The subway project is part of a comprehensive plan that will increase 'pedestrianization," reduce on-street parking, and provide more garage spaces, he said.

"Basically, the question is 'is the public area for cars or for people,' and we believe it's for the people," Sullivan said.

Not Major

Cambridge Mayor Alfred E. Vellucci said yesterday the plan did not constitute a major redevelopment project, but added that the Square will have a "different look."

Vellucci said he received some "worried complaints from area businessmen" who are concerned about the impact of the new line on Harvard Square's economy.

He said he feared that construction and disruption of traffic patterns would make "a mess" of Harvard Square.

Reactions of Harvard Square businessmen to the Red line project varied yesterday. One restaurant manager said "it has to hurt us," but Thomas E. Caputo of Nini's Corner said "Do I look worried?"

Fred Cohen of Out of Town News said the project was a primary concern of the Harvard Square Businessman's Association, and added that most businessmen would just "wait and see.