After months of indecision, the White House yesterday announced its support for a new Department of Trade designed to strengthen America's ability to meet foreign competition.

The new department would be formed from elements of the Department of Commerce that now deal with international trade and domestic industries and the White House's Office of the U.S. Trade Representative, which was designed as the trade policy-making organ of the government.

"We need a stronger, more consolidated voice for free trade," said Commerce Secretary Malcolm Baldrige at a White House briefing announcing the reorganization plan.

"If we are to meet the challenges of foreign competition," he added, "we must take the institutional steps that will be necessary to meet those challenges by consolidating trade responsibilities in one cabinet department."

Trade reorganization had been the subject of a massive turf battle within the administration at a time when the country's trade deficit is soaring to record highs and the free trade philosophy of the president is under attack by an increasingly protectionist Congress reflecting the views of both business and labor.

The turf battle centers around whether the Commerce Department or the White House's Office of the U.S. Trade Representative should control America's trade policy. The administration proposal appears to go down the middle, though there are fears that the smaller USTR will be swallowed up with Commerce's trade apparatus.

Baldrige, however, said the head of the new Department of Trade would, in effect, serve as the U.S. Trade Representative.

While highlighting the importance of trade, the reorganization effort would lead to the abolishment of the Department of Commerce, a hodge-podge of unrelated agencies that includes the Census Bureau, Patent Office, the Office of Economic Analysis and the National Oceanic and Atmospheric Administration, which runs the Weather Bureau.

Despite yesterday's announcement, the administration officials said they are undecided on what would happen to those agencies, which have powerful constituencies among the public and in Congress. Baldrige, who has been lobbying hard for a separate trade department, said their fate would be decided after consultations with Congress, but that the administration wants to end up with just one department.

Baldrige said President Reagan has made no decision on whether he or U.S. Trade Representative William E. Brock, now in Europe, would head the new department, though the secretary said he would like to stay with the administration.

Both Baldrige and White House spokesman Larry Speakes said no firm decisions have been made on just what elements would go into the new Department of Trade. As least 25 different agencies presently hold a piece of the trade pie, and it appears likely that the most powerful of them--especially the State, Treasury and Agriculture Departments--would battle efforts to weaken their input into national trade policy.

The administration has run into problems, though, with previous reorganization efforts. It has not, for instance, been able to abolish the Department of Education as Reagan promised during his presidential campaign. His proposal to merge the Department of Energy into the Commerce Department is also dormant and yesterday's plan to abolish the Commerce Department makes it more unlikely that it will come about. Speakes and Baldrige, however, insisted the Energy-Commerce merger was still alive.

The Reagan trade reorganization plan gained a mixed reaction in the Senate, where hearings are under way on a bill pushed by Sen. William V. Roth Jr. (R-Del.) that would set up a small "lean and mean" Department of Trade.