The Carter administration yesterday gave its "full and unconditional support" to a bill eliminating tax exempt bonds as a means of financing single family housing.

The bonds, which until recently were one of the fastest growing segments of the finance market, effectively reduce the interest rate on mortgages by two or three percentage points.

Donald C. Lubick, assistant secretary of the Treasury for tax policy, denounced the bonds as "wasteful, expensive, and inflationary." His presence as the administration's spokesman before the House Ways and Means committee was evidence that the president has sided with the Treasury in its bitter fight with the Department of Housing and Urban Development.

HUD, which did not ask to appear at the hearing had favored tax exempt bonds for low and moderate income households and for narrowly targeted objectives. Carter had supported this viewpoint in his January budget message.

Last year state and local governments issued $3.3 billion in mortgage revenue bonds. More than that has been issued in the first four months alone of 1979. As of April 25, when legislation was introduced to stop the practice, 105 more states, counties and cities were waiting to issue more than $2 billion more in tax exempt bonds for single family homes.

When the income of those persons who could buy houses at under market rates was limited at all by the issuing authority, it was well above the median income of the area.

Lubick outlined the administraton's objections to these bonds:

Loss of revenues. If half of all mortgages were financed with tax exempt bonds, the drain on the Treasury would reach $11 billion by 1984.

Inflation. Besides adding to the budget deficit, the bonds insulate the housing market from high interest rates and thwart administration efforts to cool off the economy by weakening demand.

"The American people will perceive that we do not take inflation seriously if we choose, in effect to spend billions of dollars annually on a new program of housing subsidies for the middle class," said Lubick.

Waste and inefficiency. Of each $1 cost to the taxpayer, only 50 or 60 cents is actually passed on to the home-buyer. Moreover, those families who do not otherwise qualify for credit are excluded from this program because investors demand the highest quality mortgages. As a result, the federal subsidies benefit those who can afford to buy their own homes.

Lubick also cited adverse impacts on the stock market, capital formation by industry, other tax exempt bonds, especially those to finance low income housing, and the savings and loan industry. The administration favors direct subsidies instead.

It was clear that, apart from the leadership, many of the Ways and Means committee members present did not sympathize with Lubick when he said that middle class Americans did not need help homes. As proof, Lubick said that in 1976 two thirds of those with incomes between $10,000 and $15,000 owned their own homes.

Kenneth R. Biederman, director of the office of economic research at the Federal Home loan Bank Board, expressed a diametrically opposed position on incomes and targeting, and also pointed out three shortcomings in the bill, which is sponsored by Ways and Means Chairman Al Ullman (D-Ore.).

The bill exempts veterans' housing. In Oregon 79 percent of all housing bonds sold last year were for veterans' housing. Biederman suggested that existing veterans programs be grandfathered, rather than a general exemption made.

A long parade of witnesses, most of them state and local officials concerned with bond issues, have asked to testify at the extended hearings. Daniel Whitehurst, mayor of Fresno, Cal. and spokesman for the National League of Cities, yesterday challenged many of the administration's assumptions in opposing the bill.

He stated that fewer families today find they can afford to own their own homes since the growth of income has not kept up with housing costs since 1970. CAPTION: Picture, Assistant Treasury Secretary Donald C. Lubick testifies yesterday before the Ways and Means Committee. By James K. W. Atherton-The Washington Post