The Office of Management and Budget has proposed a 20 percent reduction in the Consumer Product Safety Commission's budget request for fiscal 1984, setting off a storm of protest from the agency chairman, consumer advocates and key House members.

The CPSC had asked for $35 million and 624 full-time workers for fiscal 1984 -- but the OMB has proposed that the agency receive only $28 million and 500 workers. The agency is operating in fiscal 1983 with a $33.5 million budget and 636 workers. At the peak of its power, in fiscal 1981, it had resources of $42.1 million and 889 workers.

Commission Chairman Nancy Harvey Steorts said in a six-page letter to OMB Director David A. Stockman that the proposed reductions to $28 million and 500 workers "are potentially mortal wounds" for the agency, that they "should not be tolerated," and that they "would cut into the very marrow of the agency; there is no fat left."

Steorts said that the CPSC has "absorbed more than its fair share of reductions" and she questioned the reasons for the proposed cuts: "It is difficult to understand why OMB would take the chance of destroying an agency which provides the most visible consumer protection initiatives of this administration at such a low cost."

OMB officials declined comment on the imbroglio.

"You want to know about CPSC--that silly little outfit?" said OMB spokesman Ed Dale.

Asked about the proposed cuts and the Steorts' appeal, Dale said, "What is she doing? B----ing about the proposed budget cuts? I can't say what we proposed -- by custom and by rule, I clam up . . . until the end of January when the budget comes out."

Steorts first learned about the OMB proposal last Friday. "They telephoned me in the afternoon and gave me the numbers," Steorts said. "We immediately appealed the proposal."

She sent letters that same day to Stockman and to White House advisers James A. Baker, Edwin Meese III and Craig L. Fuller, asking them to help the CPSC win the full budget request of $35 million. On Dec. 13, she sent a second, more detailed letter to Stockman, saying that the proposed reduction "could cripple the agency's ability" to execute its congressional mandate.

Meanwhile, the other two Republican members of the commission--Stuart M. Statler and Sam Zagoria--expressed shock at the size of the proposed cutback and chagrin at the message that the cutbacks represent.

"Some people in government are philosophically opposed to product protection of the public," said Zagoria.

Statler said the proposals "seem to be a slap in the face" for the agency, which took a 30 percent budget cut in fiscal 1981, adjusted its program to work within those smaller resources and tried to operate within the regulatory philosophy of the Reagan administration--namely, "achieving results in a cooperative spirit with industry, not an adversarial spirit."

David Pittle, who served nine years on the commission before his term expired Oct. 26, said the budget and staff proposals "translate into increased consumer pain and suffering."

CPSC supporters in Congress and consumer advocates also were critical.

"These are the most drastic cuts proposed for any health and safety agency," said Rep. Henry A. Waxman (D-Calif.), chairman of the subcommittee that authorizes and funds the CPSC. "Two years ago, the Reagan administration tried and failed to kill the agency outright," he said. "This proposal is another attempt to gut the agency, thereby endangering the life of every American."

David Greenberg, legislative director for the Consumer Federation of America, said the reductions are part of a Reagan administration plan to "punish consumer agencies . . . and to undercut the mission of the agency."

He described the proposed cuts as "an early Christmas present for the producers of defective products."