President Reagan rejected any "budget-busting bailout" for the housing industry yesterday, despite warnings that Congress is prepared to approve deep subsidies of mortgage interest rates without White House support.

Separately, a Cabinet council yesterday voted to urge Reagan to reject the mortgage-subsidy idea, virtually ending the chances for administration backing for the plan, according to informed sources.

But key Senate Republicans said they would proceed anyway with plans to mark up legislation for a $1-billion-a-year interest rate subsidy they have proposed, even though they had no endorsement from Reagan.

In a speech to the National Association of Realtors, Reagan did not specifically oppose the Republican-backed legislation, introduced by Chairman Richard Lugar (R-Ind.) of the Senate housing subcommittee. A White House spokesman said later the president will make a final decision on the bill in the next few days, but the Cabinet council's opposition makes endorsement unlikely.

The Lugar proposal would pay for 4 percentage points of mortgage interest for five years to help moderate-income persons buy homes. When the house was resold or refinanced, the recipient of the aid would pay back the federal subsidy.

Reagan did stress, however, that he could not go along with "budget-busting bailouts" for the housing industry. Instead, he announced five modest and inexpensive measures he would take to help people buy homes and said the best hope for the industry lies in continuation of his basic economic plan, focusing on spending cuts.

"I believe the best hope for Americans, and that includes those of you in the housing industry, is a sustained recovery of our economy . . . But we can only work this cure if we hold firm to the recovery program now in place," Reagan told the group.

The realtors do not support the Lugar plan, which applies only to new-home sales, not the resales on which realtors rely. Reagan received a resounding reception from the group and was continually interrupted by applause.

The measures Reagan announced yesterday involved inexpensive rules changes that could be accomplished without congressional action. They include loosening restrictions on mortgage revenue bonds issued by state and local governments to provide below-rate mortgages, allowing pension funds to invest more of their assets into mortgages, broadening FHA rules to allow backing of mortgages for condominiums, allowing real estate businesses to offer more services than they now can and speeding the processing of FHA mortgages.

The National Association of Home Builders, strong backers of the Lugar proposal, immediately denounced the president's announcement as "too little too late" and said they would look to Congress for more help.

"The proposals would be ineffective in stimulating new construction and new jobs," said NAHB President Frederick Napolitano. "The president continues to cling to his basic economic program despite mounting evidence of deepening recession, record-high interest rates and rising unemployment."

Only a year ago, the homebuilders were strongly supporting the president's economic recovery plan. At their convention in January, however, they proposed the interest-subsidy plan as a one-time boost for their beleaguered industry, undergoing the longest and deepest depression since World War II.

The bad news continued for the industry yesterday as the Commerce Department announced another decline in new-home sales in February to the second-lowest level on record. Sales in February were at an annual rate of 336,000, an 11.8 percent drop from January and 34.2 percent lower than year-earlier figures.

Senate Banking Committee Chairman Jake Garn (R-Utah) said yesterday he would expedite consideration of the Lugar bill, which he supports, reiterating that he does not view it as an industry "bailout."