The Office of Management and Budget, which had cut the proposed budget for the Consumer Product Safety Commission for fiscal 1984 by 20 percent, has decided to restore a major portion of that reduction, CPSC Chairman Nancy Harvey Steorts said yesterday.

"I am happy to report to you that for fiscal year 1984 the CPSC will have a budget of $32 million and 595 people," Steorts said.

The proposed budget is only slightly more than halfway between what the agency had requested and what the OMB proposed a week ago. The CPSC had asked for $35 million and 624 people; and the OMB proposed on Dec. 10 that the safety commission receive $28 million and 500 people. That proposal triggered a round of protests from Chairman Steorts, key House officials and consumer advocates, who described the proposals as "devastating."

The OMB confirmed yesterday that the matter of the CPSC budget had been "amicably settled." However, OMB spokesman Ed Dale said he couldn't confirm or deny the amount of money that is being allocated to the agency.

Yesterday, Steorts treated the revised OMB proposals as a victory for her agency.

"This is a terrific vote of confidence from the Office of Management and Budget . . . and all of the employes of CPSC are quite ecstatic about this," Steorts said in an interview taped for broadcast today over the Cable News Network.

However, even with the revised proposal, the CPSC will receive $1.5 million less during the next fiscal year than it currently is receiving and its work force will be reduced by 23 employes.

Steorts said she doesn't know yet what activities will be cut as a result of the smaller budget. "We haven't had a chance to do the analysis yet," she said. But she said one area that is likely to be trimmed is contracting with outside companies and agencies for research and development.

The chairman said she can't be sure what persuaded the OMB to revise the budget proposal for the CPSC. "I put in an appeal to OMB, and we negotiated," she said.