House and Senate budget conferees broke off negotiations yesterday, unable to agree whether the fiscal 1979 budget should contain any money for public works projects.

Despite intensive lobbying by the administration some of it by Vice-President Walter Mondale, the Senate voted overwhelmingly yesterday to reinforce the demand by budget committee chairman Sen. Edmund S. Muskie (D-Maine) that the budget for the fiscal year starting Oct. 1 should contain no money for public works projects.

That vote, observers said, effectively kills any chance the administration has of getting its so-called soft public works bill approved this year.

Soft public works projects - which seek to hire hard-to-employ individuals for urban maintenance projects - are a centerpiece of the urban program announced by President Carter last spring. Congress already has effectively killed another major portion of the urban initiative: a special bank to make loans to urban businesses.

While the Senate voted 63-21 to kill public works projects in yesterday's vote, the House budget contains $2 billion for such spending - $1 billion presumably for a program like the President's soft projects and another $1 billion for more traditional public works projects such as building construction.

Despite the Senate vote, House Budget Committee Chairman Robert Giaimo (D. Conn.) said yesterday that House conferees could not get House approval of a conference report that does not include at least $1 billion for public works, although privately House members say they could pass a budget that allowed $750 million for soft and hard public works.

Unless conferees agree by midnight Monday, they must report back to their respective bodies in disagreement.

There is some possibility that Congress could fail to have a binding budget in place by the Oct. 1 start of fiscal 1979. Should that happen, Congress could not enforce a binding ceiling on expenditures or a binding floor on revenues - which would give Senate Finance Committee chairman Russell Long (D-La.) a lot of maneuvering room when he brings his tax cut bill to the floor the last week of the month.

One fact that might impel the House and Senate to come to an agreement on a binding budget resolution is that Congress cannot adjourn until it has approved a budget.

In a related development, the House overwhelmingly voted yesterday to amend an International Monetary Fund bill to mandate a federal budget that is in balance by 1981.

The budget that the conferees are working on now contains a deficit of around $38 or $39 billion, well below the $60.6 billion deficit President Carter foresaw when he made his fiscal 1979 budget proposals to Congress last January.