The dollar continued to fall yesterday amid increasing signs that the United States and its major allies may be discussing privately the timing for a new, early meeting of the Group of Seven financial leaders to realign exchange rates.

But such a meeting will not be held prior to the conclusion of negotiations between the Reagan administration and congressional leaders on a deficit reduction package, a source said. Those talks are not expected to end before next week at the earliest.

The G-7 countries, which have agreed to try to stabilize currencies "around current levels," are the United States, West Germany, Japan, Britain, France, Italy and Canada.

Despite moderate intervention, the dollar dropped in Tokyo to its lowest level since the late 1940s against the Japanese currency, closing at 137.55 yen, down from 140.75 yen on Wednesday. In Frankfurt, the dollar reached a seven-year low and closed at 1.7170 German marks, down from 1.7389. The dollar also touched a seven-year low against the Dutch guilder, and five-year lows against the British pound, French franc and Italian lire, and a post-World War II low against the Swiss franc.

Meanwhile, economists John Kenneth Galbraith, Martin Feldstein and Herbert Stein said that American monetary policy should not be set to keep the dollar from falling, but to avoid a U.S. economic decline.

Testifying at a House Banking Committee hearing yesterday on the stock market collapse, the trio said that the dollar should be allowed to slide, and that attempts to support it through higher interest rates would harm the American economy. Feldstein said the dollar needs to drop at least 30 per cent over the next five years.

A Harvard professor who resigned in 1984 as Reagan's Economic Council Chairman in a disagreement over economic policy, Feldstein also argued that the United States "should explicitly, but very amicably, abandon the policy of international economic coordination."

Feldstein said that Japan, West Germany and the other G-7 nations -- as well as the United States -- are entitled to pursue policies they believe to be in their own best interests. Besides, he said, American officials should recognize that Japan's and Germany's "choice of policies does not have a significant effect on the American economy."

Responding to Feldstein's suggestion that the international monetary pact called the Louvre Accord be abandoned, an administration official said, "I would have thought we all would have learned this past week what an interdependent world we live in."

Given the chaotic conditions of financial markets, leading officials in all countries yesterday were anxious to assure that the Louvre Accord and the G-7 process remain very much alive. Treasury Secretary James A. Baker III told reporters, "The United States firmly supports the Louvre agreements, which the President of the United States said himself only two days ago." He brushed off other questions on the dollar's fall.

Edouard Balladur, the French finance minister, yesterday said that he would like to see "conditions" met that would allow a meeting of the G-7 to be held "very rapidly," according to wire service reports.

Balladur did not define those "conditions," but European and Japanese sources have made it clear that a convincing U.S. budget reduction package would have to be presented in exchange for Baker's key demand -- reversal of the German policy favoring high interest rates. Together, those commitments are expected to lead to an agreement to stabilize exchange rates at a somewhat lower level for the dollar than prevailed last February.

In Frankfurt, Norbert Walter, a senior economist at the Deutsche Bank, predicted, "There will be some formal or informal realignment" soon. He added: "I think that both the Germans and the Japanese would choose to accept an increase in their currencies" rather than the likely alternative, a recession brought on by high interest rates.

The economists testifying at the Banking Committee hearing agreed that the chief economic response to the stock market crash of last week should be an effort to keep interest rates low and money supply ample.

But they disagreed on the importance and size of a prospective cut in the budget deficit. Feldstein and Stein said that a proposal by a fourth panelist, Allen Sinai of Shearson Lehman Bros. Inc., for a $50 billion budget reduction this year was "a prescription for disaster."

Galbraith, whose account of the 1929 Great Crash is considered a classic, stopped short of predicting a new recession or depression. He did, however, say that the fallout from last week's market decline would cost some jobs, hit real estate values and some consumer markets.

"All this, one judges, will affect people at large," he said. "There is an old and unlovely but exceptionally apt saying that when the horse dies on the street, the oats no longer pass through to the sparrows."