AFL-CIO President Lane Kirkland, voicing some reservations, endorsed legislation yesterday setting stiffer penalties for union officials convicted of corrupt practices.

The measure, S. 1785, proposes the automatic suspension of union leaders found guilty of wrongdoing and would establish as a felony an act in which an employer pays a bribe--for "labor peace," for example--of $1,000 or more to a union representative.

"Union office is a calling, not a business. The morals of the marketplace will not suffice," Kirkland told the Senate permanent subcommittee on investigations, which has been holding hearings on alleged labor-management corruption.

"Those who enter" union office "are, and should be, held to a higher standard," the federation president said. "If a person holding union office takes an employer payoff for a substandard contract, misuses the right to strike for his own benefit or pilfers from the union treasury, that person does not simply tarnish his own honor. He tarnishes the . . . efforts of scores of men and women" who honorably fulfill their duties, Kirkland said.

The statement marked Kirkland's strongest public attack on union corruption since he took office two years ago. He had shied away from the subject in past news conferences and interviews, often by saying the federal government is better equipped to handle matters such as charges of pension fund mismanagement in the Teamsters union.

Some organized labor officials and observers have speculated that Douglas A. Fraser, United Auto Workers president, influenced Kirkland's stronger vocal stand against union wrongdoing. Fraser, whose union reaffiliated with the AFL-CIO last June, has called for the suspension of union leaders--such as Teamsters President Roy Williams--indicted on alleged violations of law.

But a key federation source, who requested anonymity, dismissed that speculation yesterday as "a bunch of bull----." The source said "Fraser's suggestion that people be shipped out on an indictment actually violates due process" and "has nothing to do" with Kirkland's position.

Suspension upon conviction, prior to appeal, "has been the federation's policy all along. But you have 102 international unions with 102 different constitutions in the AFL-CIO," said the source, adding that the federation's doctrine of union autonomy effectively prevents Kirkland or any other federation official from intervening in the affairs of individual unions.

Kirkland's basic reservation about the bill concerned its proposed 10-year suspension period for union officers convicted of a union-related felony. He said a judge should be allowed to impose a suspension of from five to 10 years depending on the circumstances of the case. The current law imposes a maximum five-year suspension.

"Both reason and human feeling support the view that there are situations in which a 10-year disqualification is too severe," Kirkland said.

He also asked the committee to clarify the illegal-payoffs section of the proposed law to eliminate possible prosecution of technical errors and to protect legitimate labor-management financial ventures.