Harvard has agreed, after a month of negotiations with protesting local residents, to preserve two "historically significant" buildings on the site of its proposed $25 million University Place, a move that officials say may raise the cost and perhaps endanger the massive condominium and commercial office development.

The University will present its final plan for the two-year-old project--which encountered its first significant neighborhood opposition in December when the Cambridge historical commission refused to allow the demolition of the buildings at 134 Mt. Auburn St. and 3 Mt. Auburn Place--to the commission tomorrow.

Harvard faces a January 18 deadline for reaching a satisfactory compromise with nearly 200 residents who have asked the commission in a petition to block construction until Harvard revamps the University Place design to conform with their concerns for the preservation of their neighborhood.

At that time the Corporation must decide whether to proceed with the commercial complex, which would provide luxury housing and office space to individuals unaffiliated with the University. Harvard's two-year option to purchase the land for University Place from Cambridge businessman Louis DiGiovanni runs out January 24, and the historical commission will not meet again until February.

But even if the historical commission accepts Harvard's latest proposal--a decision that appears likely, Charles Sullivan, executive director of the commission, said yesterday--the University may decide to drop plans for the development altogether.

In order for the Corporation to approve construction, Robin Schmidt, vice-president for government and community affairs, said yesterday, the project must not only satisfy local residents but also provide Harvard with a fair return on its investment.

The commission's efforts to modify the design for University Place have been the most recent in a series of complications that together could make construction unprofitable, Schmidt added.

He said the mid-January deadline "doesn't give us much time to work out a solution," but declined to speculate on the project's chances for Corporation approval.

"Originally the design satisfied our investment concerns," Schmidt added, saying that because of changes forced by the historical commission he is now unsure whether the office and condo complex would earn an acceptable profit.

Several neighborhood leaders, who asked not to be identified, said they are reluctant to continue effort to pressure the University to preserve the two historically significant buildings at their current locations because Harvard might then decide to abandon the project.

Residents are worried that another developer who might replace Harvard at the site--located across from the Mt. Auburn St. post office and currently used primarily as a 350-space parking lot--would design a project that overall would be far less responsive to neighborhood concerns.

"This project is different in that we were asked by city officials to step in and come up with a plan that would be less undesirable than other proposals," Schmidt said.

Schmidt added that Harvard has not yet decided how to revise its design for presentation to the commission tomorrow.

But Jacqueline O'Neill, assistant to the vice-president for government and community affairs, said that at the most recent meeting with neighborhood representatives, Harvard outlined a "minimum guarantee" proposal which would revamp University Place plans to leave the house at 134 Mt. Auburn St. undisturbed at its current location and to move the building at 3 Mt. Auburn Place to one of five potential locations in the neighborhood.

"We haven't had time to go through all the options," O'Neill said, adding, however, that "Everyone agrees that neither of the buildings will be demolished."