Chrysler Corp. yesterday outbid competitors for government-held warrants to purchase 14.4 million shares of Chrysler stock at below-market prices.

Chrysler, operating through the New York-based investment firm of Salomon Bros., offered $21.602 for each warrant. That means the government could make $311.07 million, nearly $61 million more than Chrysler was willing to pay for the warrants in July.

But exuberant Chrysler officials, who announced that the warrants would be retired, said that the extra cost was worth getting the warrants back into the company's possession.

The purchase closes the book--or at least the financial chapter--on Chrysler's four-year-old dealings with the federal government in its efforts to regain prominence as one of the nation's major automakers.

Chrysler beat out four competitors in its battle for the warrants. Three of the opposing bids were submitted to the U.S. Treasury yesterday. One came from an investment group led by First Boston Corp. of $15.559 per warrant; another was from Goldman Sachs & Co. and Prudential-Bache Securities Inc. of $20.668 per warrant, and another from a group led by Morgan Stanley & Co. of $17.541.

Shearson/American Express Inc. submitted an unsolicited bid, ranging from $205 million to $260 million for all of the warrants, in July.

The Shearson offer is believed to have influenced Treasury's decision to seek competitive bids.

The warrants, good until 1990, allow the purchase of a share of Chrysler stock for $13. They were obtained by the government in return for the $1.2 billion in federal loan guarantees that Chrysler needed to pull itself from the brink of bankruptcy.

Chrysler stock was trading below $7 in 1979 when the warrants were issued. Buoyed by the company's impressive turnaround since then, the stock closed at 29 1/2 on the New York Stock Exchange yesterday.

Chrysler paid off the remainder of its federally backed loan last month, seven years ahead of schedule. The company had asked the government to surrender the warrants. But the government refused. The company then offered to buy back the warrants for a total of $250 million. The government also turned down that request, opting instead to offer the warrants to the highest bidder.

Chrysler officials feared that, had the warrants gone to another bidder, they would have floated around in the market for seven years, depressing the value of the company's stock and thereby hampering Chrysler's efforts to raise money for future needs.

"Now, we're going to retire the warrants, take them out of circulation," Gerald Greenwald, Chrysler's vice president of finance said yesterday. "We're free at last!"

Chrysler's purchase of the warrants, combined with the early payout of its $1.2 billion in guaranteed loans and a recent $1 billion labor settlement with the United Auto Workers union, puts a heavy weight on the revived company's financial resources.

But Greenwald said yesterday that the company has already devised a way to carry the load.

"We had the cash to pay off the $1.2 billion, so, that's already finished," Greenwald said. He said the labor agreement, extending over the next 25 months, "was stronger in money terms than we had hoped for." But the union has demonstrated its desire "to keep pushing for higher productivity," which should help offset the cost of the agreement, Greenwald said.

He said Chrysler's steadily rising new-car sales also help. The company has up to March 12 to raise the necessary money for the warrants purchase. But Greenwald said he sees no problem.

"We had to take these warrants off the market. We had to clear the decks," he said.

Chrysler Chairman Lee A. Iacocca, who has roundly criticized the government for making the company take the warrants in the first place, said: "In the end, I guess we can take some measure of pride in having made a solid contribution to reducing the runaway $200-billion-a-year federal deficit.

"I hope this administration will now attack the remaining deficit with the same zeal."