Treasury Secretary Donald T. Regan was loudly booed yesterday by more than 1,000 credit union representatives when he told them the administration "remains committed to the withholding of dividend and interest income."

The group, members of the Credit Union National Association, were here to lobby Congress for repeal of the requirement passed last year that, beginning in July, 10 percent of interest and dividend payments be withheld for tax purposes.

"I am frankly appalled that some financial institutions have used questionable scare tactics to suggest that this is a new tax, or that retired people will lose their savings, or that banks will lose their shirts in performing this function," Regan declared.

"My response is: You won't lose your shirts unless you lose your heads," he said.

The secretary labeled as "nonsense" claims in ads opposing withholding that, to get an exemption, an investor would have to reveal his financial condition or that bankers would become "tax collectors."

"One notice reached new heights of demagoguery by saying that old people would lose--and I quote--'money that might otherwise go to pay for food, housing and medical bills,' " Regan said.

"Someone should be ashamed. There are no new taxes involved and over 85 percent of retired people are exempt."

During a question and answer period, Regan repeatedly said that financial institutions had not backed up claims that withholding would add greatly to their costs. Then J. Alvin George of San Diego, past chairman of CUNA, who had introduced Regan, handed him a sheaf of papers saying, "Here are eight pages of facts and figures for you," and the audience burst into applause, cheers and whistles.

Regan quickly scanned the top page and noted that a credit union with assets of $500,000 would have to spend about $1,400 to set up a withholding system, and that one with $10,000,000 in assets more than $7,000. Regan said that those amounts did not seem excessive to him.

One questioner said withholding was "a very evil attempt to speed up" the government's cash flow.

Another, a woman from McAllen, Texas, said her credit union staff was having to take a lot of time giving advice to members because the local Internal Revenue Service information office had been closed.

Regan defended withholding on the grounds that it is necessary to collect from tax cheats who do not pay the personal income taxes due on interest and dividends. Many low income taxpayers, or those over 65 with incomes up to $20,000 for a single individual or $25,000 if they file a joint tax return, can exempt themselves from withholding by filling out a simple form and giving to whomever is making the interest or dividend payments.

But none of the explanations seemed to mollify the audience. "We do not want to become a tax collecting arm of the federal government," one CUNA member told Regan.

At one point, Regan said to the hostile group, "I've been out of the private sector for only two and a half years. I had never been in government before. I am a citizen of the United States. I am not your enemy . . . Please don't get that 'us' against 'them' attitude."

As he left, Regan quipped, "Thank you all for a very nice reception." There were still boo's to be heard amidst the polite applause.