President Reagan yesterday completely rewrote his proposal to increase depreciation allowances for business and in the process cut the size of the tax break by about one-third.

The change would reduce Reagan's business tax cut to $49 billion for the three-year period 1982-84, compared with his original proposal of $64 billion. The cut in business taxes in 1984 would be about $24 billion instead of about $33 billion under the first proposal.

Administration sources said concern about the need to balance the federal budget in 1984 was a major factor in the decision to go with a smaller business tax cut. The change was part of a package offered yesterday by the White House and described as a bipartisian measure that can pass Congress despite opposition to some of its features -- principally a three-year personal income tax cut -- by some House Democrats.

The original plan provided for tax write-offs of investments in business equipment in either three years of five years, and deductions of investments in structures generally in 10 years. The year-by-year depreciation allowances were calculated according to a sharply accelerated schedule.

Now, in effect, the so-called 10-5-3 scheme has become a 15-10-5-3 plan, with the new approach fully effective retroactive to Jan. 1, 1981, instead of being phased in over a five-year period.

Treasury officials said the precise schedule for year-by-year allowances for each class of property were still being worked out. However, the intention is to reduce the amount of acceleration roughly in half.

Both the original administration proposal and the modified version would greatly increase depreciation allowances compared with present law, under which some equipment must be written off over periods ranging up to 28 years and some structures up to more than 40 years.

In the original proposal, factory buildings, retail stores and warehouses used by their owners were such structures not occupied by their owners would be written off in 15 years. Residential structures for rental, such as apartment buildings, other than low-income housing, were to be written off in 18 years.

Now Reagan wants to treat all structures regardless of ownership as a 15-year class of property. Treasury officials said some additional depreciation would be allowed for low-income housing.

Other parts of the business tax cut proposal, such as creating a 10-year property class for certain long-lived utility property and extending the full 10 percent investment tax credit to equipment having a five-year write-off period, were not changed.

Under the modified proposal, the size of the tax break for business would be smaller each year than under the first scheme. Dropping the five-year phase-in approach does not fully offset the impact of the now smaller depreciation allowances in the early years of an investment property's life. Thus, there is a revenue savings each year compared with the original plan, and that savings will get larger indefinitely.

One reason for these major changes, aside from the need to reduce the overall size of the tax cut because of budget needs, was to simplify the proposal. It had been sharply criticized because of the complex rules associated with the proposed five-year phase-in.The reduction in the write-off period for many structures to 10 years from an average of about 32 years under present law was also regarded as overly generous by many economists.